Ep #132: Releasing Tax Stress as Your Income Grows

Hey beautiful coach, we're going to talk about taxes here for a moment. Because taxes often feel like the one part of money you don't fully want to deal with. And I get that. Money is coming in, things are growing, and at the same time, there's uncertainty around what you owe, what you should be doing, and whether you're on track. And here's what most women don't realize: The pressure around taxes is actually not coming from the taxes themselves. It's coming from how money is being handled along the way.

I'm Kendall, and in this episode of The Money Coach School Podcast, we're talking about what taxes are really showing you about your money and how to shift that so that your income starts turning into profit and money that supports you. I've got lots of tips and strategies here for you in this episode, so it's all here for you. In this episode of the Money Coach School podcast, let's dive in.

Welcome to The Money Coach School Podcast. To really excel at coaching women, you have to be skilled, confident, and even fearless at money coaching. If you're passionate about women holding genuine money power and love supporting women entrepreneurs, then this is the show for you. Now, here's your host, money feminist Kendall SummerHawk.

Hello, beautiful coach, and welcome back to The Money Coach School Podcast. This is where we talk about money differently, where you take ownership of your money, which means how it comes in, how much you keep, and how it grows into real financial independence for you. So today we're talking about taxes because it's tax season right now. And I have been wanting to do this episode like from the very beginning of when I started my podcast two and a half years ago. And here we are, we're doing it here today.

So taxes are, I think, one of the clearest places your relationship with money shows up, especially as your income starts to grow. And this is where a lot of women feel it shift. You're making more money, there's some momentum, things are working, and at the same time, how you handle money starts to matter more. And taxes are part of that. So today I want to walk you through why taxes bring up so much emotion for women, what's actually happening underneath that fear and avoidance, and I'm going to give you specific strategies on how to start handling your money in a way that changes that completely.

So I'm also going to start with my own story with taxes because I got caught twice, two years in a row. So I'm going to share that in just a second. So before we dive in, go ahead and click the follow button. It'll take you one second. I am your money coach and every episode here is designed to expand your cash flow, strengthen how you make money decisions, and create financial independence. When you click follow, you never miss an episode.

All right, so here's what happened for me. I don't remember exactly what year it was in my business. I think it was my second year, and I made a little bit of money. And again, I don't remember exactly how much, probably sixty thousand dollars. It wasn't a lot of money. It basically replaced my job salary. And I never really thought about taxes. It just didn't occur to me. Even though I'm a Ruler, Maverick, and Accumulator in my money archetypes, it just didn't quite occur to me. So when I go to have my taxes filed, and by the way, I have to confess, I have not filed my own taxes, or I should say prepared my own taxes, since I was 19 years old. Even when I was a waitress for all those years before I got into a career, I did not do my own taxes.

So when I had my taxes prepared for me, I owed seventeen thousand dollars in taxes. Oh my freaking God. I had no idea somebody could owe that much money in taxes. So to say I was unprepared was an understatement. Now, I have a rule. I do not file extensions with my taxes for various reasons. So I had to do something. And I wasn't making that much money, fifty, sixty thousand, self-supporting, not that much money. So I had to borrow money from my mother. I had to go to my mom and say, "Hey, can I borrow some money?"

So I borrowed the money. I worked out a one-year payback plan with her, and I motor along in my business in my next year of business, and I make more money. That was the first year I made right around six figures, right around one hundred thousand dollars. And you would think I had learned, right? I didn't. So that year I owed thirty thousand dollars in taxes. So two years in a row, I got caught owing a huge amount of money in taxes. So I'm owing 30,000 in taxes, and I'm still paying my mother back for the other year. This is not a good cycle to be in.

And I'm glad I can tell you this story because I've made 30 million dollars. I have my retirement is fully funded, cash in the bank. I mean, I'm great with money. So I want to say I'm not embarrassed to tell you this, but that's actually not true. I am a little embarrassed because there's a part of me that says I should have known better. But you know what? I didn't know better. I didn't have experience. Nobody was telling me. My CPA was treating me like a girl and didn't help me with this. And he just laughed and said, "Well, it's a good thing. It means you're making money." It's like, "Dude, I'm 30 grand now in owing in taxes and still owe my mother for the other seventeen thousand."

So I had to go back to my mother and borrow more money to pay the taxes because I wasn't going to pay them late and get into that kind of a loop. And I wasn't going to file an extension. So that was a wake-up call. And by the way, here's the part that's super ironic, is even before I was in business for myself, I used to help friends, different people I knew get out of IRS debt. Like I was the go-to girl for help. You had IRS debt, come to me, I'll help you get out of it. And that was back in the day when I could actually call the IRS. The privacy policies weren't in place like they are today. So I could actually negotiate on behalf of my friends, which I did. I was awesome at it. So I knew I didn't want to get into that IRS debt loop because that's a nasty cycle to be in.

Anyway, so after the second year of this, I said, "Okay, wait a second now. Once, yeah, whatever. Twice, now this is a pattern." So this was a huge wake-up call for me because this wasn't just about one moment. This was about how I was relating to money while it was in my hands. And what I see now is that taxes bring up a lot of emotion for women. Not because taxes are complicated. I mean, they are complicated, but the CPA can take care of that for you. But because most of us were never taught how to handle money at this level. I mean, where would you learn this, right? So when income grows, there's no clear structure for what's yours, what's owed, and what actually then gets to stay.

So I want to talk about this from a few different angles because this is where I see so many women get stuck without even realizing it. So first, and then by the way, I'm going to give you some strategies. So first, let's talk about resistance and resentment. Oh, yes. This is often what comes up about taxes, what I hear from so many of my clients. So there's a moment when your income grows and, of course, your tax bill grows with it. For a lot of women, it can stir up resistance and resentment. I mean, you worked for that money, you created it, you're doing the work that generated it, and now a measurable part is going out the door.

And I think it can trigger a part of you that says, "Hey, that's mine." And plus for a lot of women, myself included, we don't like how our government spends that money. So there's all this tension and friction, and underneath that tension and friction is usually something very simple. The money isn't structured in a way that supports you. And there's often something else underneath it as well, which is this feeling of, "I worked for this, why is so much of it going out?" And that can create friction with money itself, especially when you don't feel fully in control of it yet.

And by the way, that feeling, "Hey, that's mine. Why is so much of it going out? I worked for this," I will be honest with you, that is victim mentality. I'm not going to hold back. I'm not going to pull any punches about it. That is a victim mindset. And if that's you, that's okay, but let's coach on that so that you don't experience that.

All right, so when money is handled with intention from the beginning, taxes don't land as a shock. They're already accounted for. And what that looks like is actually really simple. Money comes in and a portion of it is set aside for taxes. It's not about deciding later because it's already being handled now.

So that's resentment and resistance. Now, let's talk a little bit about fear. And this is one that I understand deeply. This is the part where most women, they don't say it out loud, but I totally get it. I used to actually say, like, there were years where I said repeatedly that I lived in fear of taxes. Oh my gosh, talk about creating your reality, right? It was like this great big boogeyman hanging over me. So there's always those moments where I would think, how much is this going to be? Did I set enough aside? What if I didn't? And a lot of that fear was really about getting it wrong, about making a mistake and having the money “taken” from me.

I think I can call it post-traumatic tax syndrome. And it's really wondering, I think if you miss something, like if you should have been doing it differently. And all of that creates a number that sounds like it's going to be a lot bigger than you expect. And because taxes are official, they're legal and binding, it can feel higher stakes than anything else in your business. So that feeling builds when there's a gap between what's coming in and what's actually being set aside for the taxes. And a gap in knowing ahead of time, an estimate of what's going to be owed. And that's really the secret here.

So for a lot of women, there's also a disconnect from the full picture of their numbers. Yes, you know your revenue, but not always knowing what's actually yours versus what's already spoken for. Taxes are not your money. It's already spoken for. So I think for me, given there were years where I've paid, oh my gosh, there were so many years, I paid hundreds and hundreds and hundreds of thousands of dollars in taxes in a single year. And my expenses are much, much higher than they are now. And expenses are tax deductible, but even so, what it meant was it would cause me to slip into feeling terrified that I wouldn't have the money to pay the taxes. That's where my fear came from, which is crazy because of course, I actually had the money. I had the money sitting in my bank. But for me, once that money was in my savings, I never wanted to give it up. I'm still that way. I never want to give it up for taxes. So it felt like I didn't have it even though I did. And I'm being really transparent with you here in this episode because taxes is really, I think, a very high stakes, highly emotional topic, and I want you to know how not perfect I am about it.

So what happens for a lot of women is money comes in, nothing gets set aside, and that tax bill is building behind the scenes. Which is why the fear can feel bigger than the actual number. But a positive shift happens very quickly when money starts being directed intentionally, because now you know what's available. You know where you stand. And I'm going to give you some tips about that in just a moment.

And then there's avoidance. This is the pattern that keeps everything in place. Avoidance doesn't look dramatic, it just looks like leaving the money where it is, or spending it elsewhere when really it's not yours to spend. It's like knowing you should set something aside and instead just not doing it. It looks like telling yourself, "I'll deal with it later." It looks like saying you need the money now and somehow magically it'll all work out later, right? I call this magical money thinking. And over time, that turns into a number that you have to face all at once. Yikes, that is not fun, it's not pretty. Avoidance creates an enormous amount of pressure, but decisions change that.

And underneath all of this, what's really missing, yes, is some information and strategy. There's no doubt about it. But really what's missing is a way of leading your money. Because when you start directing your money instead of reacting to it, everything here gets easier. So let me give you three strategies of what this can look like in practical day-to-day practice.

So strategy number one is I recommend setting aside a minimum of 15% of your net profit, and you're setting it aside for taxes. Now, I want to say I'm not a CPA, I'm not a tax accountant of any kind. So definitely you should check with a CPA. If you don't have a CPA, you need to get a CPA, a certified public accountant. So the 15% may not be the right number for you, but it's a really good baseline for you to start with.

So when I say 15% of your net profit, what I'm talking about is net profit is your total money coming in minus expenses. And by the way, you paying yourself is not a taxable expense. Sometimes it can be. It depends on your business structure. It depends on a few things. So let's just say it's not a taxable expense. So you can't say, "Well, I'm going to pay myself a bunch of money and that's an expense, so I don't have to pay taxes on that." No, it doesn't work that way.

So let me give you an example with some numbers here. Let's say you have one hundred thousand dollars in revenue. You have fifteen thousand dollars in expenses. That has nothing to do with what you pay yourself, but expenses, paying your bookkeeper, paying your assistant, paying for your website, those kinds of things, paying for your mentoring, those kinds of things. So a hundred thousand minus 15 is eighty-five thousand dollars in net profit before taxes. So you would take 15% of that and set it aside for taxes. Now what I actually do, basically I do it monthly, but if I have a big launch, I'm going to make sure and take care of it right away, which is still works out to be a monthly cycle. So that works pretty regularly. So once a month, 15%, whoop, set it aside, sweep it off into an account, there it sits waiting for taxes.

Which leads me to strategy number two. I like to put the tax money in a high-yield savings account so it grows interest while I'm waiting to actually pay the taxes. Now, this works for me because I know I'm not going to touch that money. It's not mine. It belongs to the government. Now, I don't pay quarterly taxes. I pay them annually because I have that discipline to be able to do that. But if you're paying quarterly taxes, you can still use the high-yield savings account. That money goes in there, it's getting interest for you. That's awesome. So you're making a little bit of money. Why would you want to give the money to the government ahead of time when they don't need it and you can be making that interest on it, okay? Now, if you're somebody who's going to be too tempted to spend it, then pay it to the government, okay, so you don't get caught owing taxes without the money.

All right, so I use the same high-yield savings account as my other business savings. I just have one high-yield savings account. And what I do is I have a simple spreadsheet. It has to be simple because I am like spreadsheet phobic and I am not a spreadsheet nerd. I'm a spreadsheet anti-nerd, meaning I'm not very good at them. So I have a very simple spreadsheet that separates how the money is allocated. So I have one high-yield savings account for my business money, and it's all in there together, but the spreadsheet is what tells me, "Oh, this amount is owed for taxes." So when I put the 15% money in there, I just go to the spreadsheet and I update by that 15% amount. I update the column for the tax set aside. And that way, I don't have to have tons of different bank accounts because that's not my style. It's way too time consuming and complicated to manage. I like my money to be super, super simple.

All right, strategy number three is meet with your CPA. I like to meet with my CPA in September. Obviously, I meet with them in early February, give them all my tax stuff. We're an S-corp, which means we have to file corporate taxes by March 15th and then personal taxes by April 15th. But I'm talking about meeting in September, and usually mid-September, after my bookkeeper gives me my reports through August. And I do that to check in with how I'm doing with my estimated tax liability. I look at what I do, what I give the CPA in preparation for the meeting is I look at what I've spent so far in the year on expenses, and then I use that to estimate expenses for the remainder of the year. And I've gotten really good at this over the years.

If I'm going to have a big project, I'll add that to it coming in at the end of the year, but my expenses are pretty even month after month in my business at this point. And then I do the same with the income coming in. I look at how much has come in total for the year. I look at what that's averaged. I look at the launches we're going to be doing for the final four months of the year, and I put all that together. So I give it to the CPA so I can say, "Here's actuals, and here's my estimate for September, October, November, December." And yeah, four months. And I do the same thing with the income as well. So they have everything that they need in order to estimate for me. This is not tax preparation, it's just estimating. So I like doing it in September because it gives me enough time to make changes in how much I'm saving for taxes, because when it comes to taxes, the fewer surprises, the better, okay?

All right, so to wrap up here, let's talk about what actually shifts this for you because this is actually not complicated. It's a series of clear decisions that change how your money flows and operates in your business. You start separating your money. You put that tax money aside. You set the percentage aside as it comes in. You don't say, "Well, I need this now and I'll just do more later." That will never happen. It's just not the way it works. You look at your numbers regularly. And something changes when you do that. The money becomes clear. You know what's yours and you know what's already spoken for. Like I said, tax money is not yours. It's somebody else's, it's the government's. You stop guessing, and that clarity changes how you make decisions across your entire business.

There's also a deeper shift here, and I think this is the part most women in business don't necessarily recognize deeply enough. Taxes become evidence that your business is producing. So way back when my CPA, who was such a mansplainer and hey little girl kind of guy, would just laugh at me and say, "It just means your business is doing well," and actually it would really piss me off the way he said it, but he was right. He was right in what he said, he was not correct in how he said it. Taxes are evidence your business is producing. The more money you make, the more taxes you'll pay. I would much rather pay a whole bunch of taxes because it reflects all that money coming in than the reverse, all right? It's a good thing.

Taxes become part of how your money flows through your business. It's not something you set off to the side waiting for your attention. And don't you want to have the good problem of how to minimize your tax expenditure, which is what I did years ago, which is how I funded my retirement so, so quickly. It was part of a tax planning strategy. It worked awesome.

All right, so this is where money starts to accumulate very differently for you because now your money is being directed with intention, and that's when money starts to stay. All right? So as your income grows, this becomes one of the most important parts of your business to have in place. Because making money is one thing, but having money where it stays and stacks and supports you abundantly, that's a very different experience and it's an experience I want you to have. And it comes from how you handle money while it's in your hands.

So if you're ready for your money to stay, stack, and start paying you abundantly, I invite you to come join me inside Secret Energy of Money®. Secret Energy of Money® is my six-month money mentoring. It is my signature money mentoring program. And this is where your income turns into money that you keep, your decisions create profit, and your business starts paying you abundantly. The link to that is SecretEnergyofMoney.com. I will also put it in the show notes and you and I get to coach in it. I love this so much. So check it out, come in, we're enrolling right now.

All right, my beautiful soul. Thank you so much for your time and attention here. I will see you in next week's episode. My love to you.

Thank you so much for tuning into this week's episode of The Money Coach School Podcast. If you enjoyed this podcast, make sure you follow so you never miss an episode. Also, I would so love and appreciate if you would leave a 5-star review. Your review supports women just like you in discovering all of the juicy tips and insights I’m sharing here on how to coach women on money.

And if you want to learn how to excel at coaching women on money, definitely go to KendallSummerHawk.com and check out the wealth of money coach trainings that we have for you. Thanks so much for being part of this money coaching movement and for tuning into the show every week.