Avoid these common small business tax mistakes

Block Advisors Strategy and Small Business Program Manager, Latasha Randle, chats with Host, Elizabeth Gore, about how self-employed entrepreneurs can simplify taxes, retirement, and healthcare planning. Randle shares practical advice on staying organized year-round, maximizing deductions, and building long-term financial security through proactive planning.

If you're self-employed and thinking about retirement, you might feel a little overwhelmed. Where do you even start? Don't worry, we've got you covered. Today we're talking about retirement and healthcare planning for small business and owners and freelancers.

Here's why planning matters when you work for yourself. There's no employer sponsored retirement plan waiting for you. That means it's up to you to create a strategy that works for your business and your future. The best place to start now, learn about your options. Today, we're talking about this with Latasha Randall, strategy and Small Business program manager at Block Advisors by H&R Block.

Latasha, welcome to The Big Idea. We're so happy to have you.

Thank you so much for inviting me. I am excited to be here today.

Well, we all need you. I'm telling you, our small business owners on Hello Alice, I mean, the thousands of tax questions we get every day. Um, and you've spent 23 years with H&R Block working from the field, corporate. I mean, tell me about that journey.

It's been an amazing journey. I often tell people kind of like small business owners, sometimes you fall into a decision that, you know, leads to things that you had no idea it would lead to. But I started as actually a tax professional, um, looking for a part-time job. And the amount of financial acumen I developed working for H&R Block, the things I began to learn, um, especially in the area I was in in underserved neighborhood. I realized that people really lacked financial literacy and especially when it came to taxes.

And I really fell in love with the ability and opportunity to educate people. So I stayed and you know, it led into leadership positions and that continued to grow and after a while, I had the opportunity to transition to corporate for a corporate role. And so when you get to kind of combine the field experience with working behind the scenes, it's a great mashup, I guess you could call it. And you add that to the fact that I also am a business owner. So small business has been the perfect place for me to land here at H&R Block and Block advisors.

Um, what have you seen, I mean, you've been in this so long. What what has the shift been over time on how small business owners talk of and and attract towards taxes.

So, I think there was a while ago, people were really afraid. They didn't know what to do when it came to their small business. They were like, I've kind of started this thing and I don't know what's going to happen. And so you fast forward now in the age of technology and they can find so much information at their fingertips. It kind of shifted from people being afraid and not knowing what to do to now there's so much information. They're trying to sift through and determine what's accurate, what's real, what applies to me, what can I deduct?

Uh, you know, sometimes people are getting their advice from Google, sometimes it's TikTok, you know, and then sometimes it's a true tax advisor. So that's kind of been the biggest shift in how people are getting information and knowing what's true and what's applicable to them.

Well, but still the the I understand the most common question you get is what can I deduct? Is that right?

Absolutely. The most common thing is what can I deduct? And I mean, we hear everything from our content creator saying, hey, can I deduct this outfit and makeup I purchased to produce this video to can I purchase a vehicle in the name of my LLC and deducted as a right off. So we hear it all.

And and uh, I want to know the answer to those questions.

I mean, here's what I tell people, when it comes to your clothing, the IRS has kind of pretty specific guidelines, but often times with content creators, it can get tricky. If it's clothing that you could wear that could be considered for everyday wear, it's usually not going to be a tax deduction. But if it's got a logo on it or something specific that you would only use in the production of that content, then it's absolutely.

There you go. See? That's some expertise right now. Um, you you've I've I've read you say that you should not think of taxes as once a year. This is a real everyday objective. What do you mean by that?

So that's like the biggest piece of advice I give people when they say, what's the best advice you can give? If you think of your taxes as a once a year event, you're often going to miss deductions, you're going to run into surprises at the tax desk. And especially when you think about life's changes that happen all throughout the year, every life change, just like every business change could potentially create a change in your tax return. And you don't want to wait to the end of the year to find that out.

Um, and as a business owner, cash flow is really super important. And so if you set yourself up to say quarterly payment, but you have a quarter where you make significantly more or less, you want to adjust the amount you're paying so that A, if you need to pay less, that gives you more cash flow in your business for that quarter. But if you need to pay more, that minimizes the chance that you're going to get a penalty for underpayment at tax time. So I tell people at least check in each quarter, but really think about it anytime there's a change in your business.

You get a new contract, you got to hire employees, you decide to go from your basement to purchasing a storefront. Like all of those are things that you should be pausing to speak to someone and say, how will this impact my taxes?

even down to when you purchase equipment.

Well, sure, and and well, and the big beautiful bill has changed a lot of that. So you do need to pay attention quarterly. You know, I I do think and I certainly do, you can get overwhelmed, right? On that's so much. So where where would you tell a small business owner to where do I just start?

You know, here's what I tell people. You have to really think about for your business what's important to you and what you want to invest in. When it comes to your taxes and the amount of tax laws that exist and the amount of compliance that you could be up against, this is an area I recommend people outsource. So go to a tax advisor, don't try to go it alone. Um, and you know, here's what I tell people, you can go to the IRS, you can find an uh advisor who's actually registered, you know, with the IRS, someone that you know is legitimate that you can trust.

Obviously we have brands like ourselves, Block Advisors here at H&R Block where we have wonderful tax advisors, but I tell people just it's an investment that's worthwhile for your business to invest in an actual tax advisor. Just go ahead and you know, outsource that. Don't try to run that on your own and figure it out.

Well, and you you've suggested, you know, using tax forms almost as a checklist. As a person who loves to check off lists, to me that sounds quite functional.

Yeah, you know, here's what I tell people, especially when you first start your business, most people start they're a solepreneur as we call them. They're it's just them and their business. They're often filed on a schedule C for sole proprietors and they go, they they're looking for these fancy checklists. And you go through all of these checklists and then you get to the tax return and now you've got to match up all of your receipts to the categories on the tax form.

It would be easier to just look at the tax form and say, oh, it has advertising, it has meals, it has vehicle expenses, it has licenses, it has professional fees. It's telling you all of the things that you can deduct and how to categorize them so that you're ready when it's time to file your taxes.

Yeah, that's, um, that that almost makes my blood pressure go down, right? Instead of up, the way you're describing it. Um, how should small business owners rethink about taxes? Because sometimes they really think that, hey, big corporations, they focus on it more. This is not for me. How do they rethink that?

Here's what I tell people. When you file your taxes to the IRS, you're going to be held to the same requirements as that corporation. If there's income that's required to be reported, it's required to be reported. If there are deductions you're entitled to, you want to claim your deductions. So don't get caught up in the size of your business because you're still a business nonetheless. And so regardless of the size, you want to make sure that you're a

meeting compliance, what are the requirements, what are the things I'm required to do for my business. But also what deductions are available to me. I don't want to leave any money on the table just because I thought it only applied to a certain type of business. And even when you think about things like employees, you may say, well, I don't have any employees, so a lot of these things don't apply to me. But you still got to have health insurance for yourself. You still got to prepare for your retirement. Like all the things that that big company does, you still have to do for yourself.

That's right.

That's right.

So, um, so maybe a corporate mindset in a small business environment is the way we need to think about this. Um, well, you're still a serial entrepreneur yourself. I mean, you're you're kind of the the triple threat. And so I'm curious how running your own e-commerce business, I mean, how are you advising clients?

You know, one of the things I get to tell people is I wouldn't give you any advice that I wouldn't personally take. And I get to say if I'm giving you this advice, I probably tried.

You're walking the talk.

Yes