You Are Not the Prey: Why Tax Season Prep Starts Now, Not in April
We've all heard the old adage: "The tax code was not created for W-2 employees; it was created for business owners and investors."
As a society, we're not taught how to play the "tax game" in school, which often leads to financial stress and massive, unexpected tax bills. But here’s the key takeaway from my conversation with CPA and entrepreneur Darion Wiggs: Strategic wealth-building means thinking about taxes 365 days a year.
If you're waiting until March or April to address your finances, you’ve already lost the game. It’s never too late to adopt the mindset of a successful entrepreneur and take control of your Dimensional Wealth with Wellness.
The Winning Team: Tax Strategist vs. Tax Preparer
When seeking help, it's vital to know who you're working with. Not all tax professionals offer the same value:
Tax Preparer: This person is essentially doing data entry after the year is over (think TurboTax, H&R Block, or a family friend). They take your W-2s and file your return. They are not providing future strategy.
Tax Strategist (CPA/EA): This is a licensed professional who works with you year-round. Their goal is to help you proactively reduce your tax bill by building legal strategies around your business and income.
Why Proactive Planning is Essential
The wealthy aren't waiting until the deadline to figure out their taxes. They're engaging in continuous planning because it's the only way to strategically reduce what you owe.
Estimated Taxes: As a business owner (even a side-hustle owner!), you are responsible for paying your own taxes quarterly (April 15, June 15, September 15, and January 15). If you don't save for this throughout the year, you face a huge, stressful bill (and potential penalties) when the deadlines hit. The simple solution? Save 20–25% of every dollar you make in a separate tax account.
Taxable Income vs. Gross Income: If you're a W-2 employee, you pay tax on your gross income. As an entrepreneur, you only pay tax on your net income (what’s left after your business expenses). This is the foundation of the "game"—the tax code incentivizes you to reinvest in yourself and your business through legitimate deductions.
Automatic Deductions: Once you are a business owner, expenses you would pay for anyway—like a new laptop, your cell phone, Zoom subscriptions, or even a portion of your rent for a home office—can become legitimate tax write-offs.
Your Foundation: Organization is Your Best Defense
The biggest fear in the tax world is an IRS Audit, where they dive deep into your financials to confirm everything you claimed. For many, this process is terrifying because they lack organization.
If you don’t have a paper trail, you will lose the audit.
Essential Organization Tips for Individuals and Business Owners:
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Use one primary card for expenses to easily track spending on a single statement.
You don't need to keep every receipt, but track major purchases using your bank statements.
Track your performance by regularly reviewing your accounts to know where your money goes.
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Separate EVERYTHING: Have a completely separate bank account and credit card for all business expenses. This protects your personal assets and simplifies tracking.
Keep a Paper Trail for Three Years: Take a picture of every business receipt, write the purpose on it (e.g., "podcast equipment"), and save it digitally or email it to yourself.
Bookkeeping is a Must: Even a simple Excel file to track income and expenses helps you understand your business's true performance and fix mistakes before they become crises.
The mindset shift is crucial: Don't think of accounting as boring math; think of it as protecting your assets and tracking the performance of your dream.
The Power of Self-Initiative
Struggling with the overwhelm of building your business and managing your finances? The stress of money and taxes is one of the biggest drivers of anxiety and emotional distress.
It's time to invest in your well-being.
We can complain that the system doesn't teach us, but as Darion and I discussed, there's no excuse in the information age. The path to financial literacy is readily available.
The freedom to fail also comes with the freedom to take initiative.
If you’re waiting for school, your parents, or your job to teach you about wealth, you’ll be waiting forever. You have the power to pivot, learn, and apply knowledge to your life. Pick up a book, listen to a podcast, or sign up for a webinar. Invest in your mindset, and the financial results will follow.
Listen to the Full Conversation Here
Savvy Sunday Scholar: The Tax Game w/Darion Wiggs, CPA
Are you ready to take control of your financial stress and start being intentional about your financial future? Start today by booking your free financial therapy consultation. Let's work on creating a strategic plan to elevate your wealth and wellness.
