Tax Planning Strategies and Increasing Net Worth with Karen Bahn

for bookkeepers for business owners libby podcast Feb 15, 2021

In this episode of Profits + Prosecco Podcast, I am super excited to have Karen Bahn joining us today. Karen is a friend and BOB student of mine that joined me during the first round of BOB. She is a successful and seasoned tax accountant on a mission to alleviate the fear most entrepreneurs have of the “evil” tax service known as the IRS. Through regular bookkeeping, quarterly check-ins and tax strategy to optimize planning opportunities, Karen truly becomes the team member that entrepreneurs never realized they needed.

But before we dive right in, welcome to the Profits + Prosecco Podcast! I’m your host, Katie Ferro, CPA, reformed rule follower, creator of Booked Out Bookkeeper, mom to 3 little ones, and Kajabi enthusiast.

This podcast is for entrepreneurs who desire to change their life through their profitable business, and for bookkeepers and accountants who want to escape the 9-5 and start a simple scalable bookkeeping business like I did.

Bookkeeping increases profits and profits change lives. So pop some bubbles and let me show you how!

In this episode, Karen and I are going to tackle the idea behind net worth and how you can go about increasing yours. For even more juicy details, listen to ALL of episode 11 of the Profits + Prosecco Podcast on your fave streaming platform.

Things to keep in mind when you’re looking for a CPA.

As an entrepreneur, it’s key to do your due diligence when searching for a CPA. The most important factor is whether they take their time to help you or not. If you are paying them, you should be getting quality service and guidance from them. A few things to ask yourself are.. Do they seem like they pay attention to your issues? Do they show care and truly want to help? Let me tell you this, if your CPA is meeting you once a year, that’s a HUGE red flag. They need to understand the whole picture of your personal life and work life, which requires multiple meetings. Start having those conversations and deciding on what CPA will be best suited for you because I never recommend anybody to do their own S Corp return. If you're looking for a CPA who can really help you with those tax returns, I highly encourage you to connect with Karen!

Karen mentions that paying about $1,000 is a good starting point for an S Corp return. Any charge less than that, you need to keep an eye out for any red flags. She doesn’t say this to judge or belittle those who charge less. However, if there’s a very little fee to this kind of return, there may be some concerns and things to keep in mind. Nobody would be able to prepare a return and put quality effort in for such a low charge. The time invested in doing an S Corp return the right way is worth MUCH more. You want to work with somebody who is going to put the time in, communicate clearly, and charge a reasonable amount.

How to understand your own net worth.

Net worth is what you're personally worth in your life. For any individual, it's important to understand what your net worth is. Karen shares that when you understand what you're worth, you can see if you're worth a lot or if you're in any sort of debt. Looking at the whole picture of who you are helps you to be more powerful and move forward towards success. It helps with your potential and more importantly, your wealth potential. Karen keeps everything on the books. If anybody ever asked her to get a mortgage for a house or do anything else, she knows what she's worth. She knows where she is in her life and that's a big piece to understanding your net worth. In short - net worth is what you own, what you owe, and the difference between the two. What you own is your cash and all your other big assets. What you owe is the mortgage on the things you already own. So if that's a house, what you owe is the principal balance. Student loans and credit cards are another example of what you owe.

Sometimes you're better off having things handled by someone else.

I've been working with a financial advisor to help me with my taxes because there are so many things changing right now. I know for me, I can't keep up with everything because I'm zoned into so many other things. Now, I have Karen handling my taxes but I was always holding onto this idea that since I'm a CPA, I need to handle my own taxes. One of the biggest things I've realized was that I needed to hire someone to fulfill that part of my financial responsibility. I am someone who is so guilty of having money in investment accounts and not moving them where they should be invested. I had things in my market accounts that were not growing but I thought it was fine because my balance was growing. Now, I'm thankfully having all of that managed by someone.

Karen points out that when you have someone on your team who is there to support you, it's going to make you feel so much more comfortable. If you find that trusted person it's going to make a huge difference. Whether you're a multi-millionaire or not, everybody is worthy of having a team that is there to support you. If you have that support, you have the availability to grow at a different rate. A person like a financial advisor is going to be able to find issues or missing gaps that you might not be able to see yourself.

How to start when assessing your net worth.

Karen suggests writing everything down when it comes to what you own. Keep track of what your house is worth, your car, and any retirement accounts that you may have. Every single one of your big assets, keep track of them. When you have that written down, start writing down your liabilities and what could essentially cause debt. Look at all your credit cards, student loans, or if you owe anybody money. Once you do both of those things, take the assets and subtract the liabilities. Voila, you have your net worth! This means that if you had to sell everything right now, that amount of money is what you have towards your name - It’s who you are as a person.

Tax Planning Strategies and Increasing Net Worth with Karen Bahn: The Bottomline

If you are looking for somebody to help you with your taxes or to learn more about tax planning, I definitely recommend contacting Karen on her Instagram. I hope this episode has helped you start thinking about your own net worth and the whole purpose behind it. After all, your business is designed to be the vehicle that gets you to the life you desire!

Don’t forget to tune into episode 11! Thank you so much for listening to Profits + Prosecco Podcast. I hope this episode was helpful and taught you things about net worth you weren't aware of.

If you enjoyed the episode, please take a second to rate and review. Each review helps us reach and inspire more entrepreneurs and bookkeepers just like you.

Don’t forget to take a screenshot, share it in your Instagram stories, and tag me at @orderlyaccountingbykatie. Cheers to your inevitable success and I’ll see you in the next episode!