December 4, 2025 • 32 mins
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Taxes drain more profit than most owners realize, and that single fact changes how we build, run, and sell a creative business. The Dead Pixels Society sits down with accounting expert Tanya Lawrence to map out the moves that protect cash today and increase valuation tomorrow—without drowning in jargon or guesswork.
She starts with the foundation: Choosing the right tax treatment as your company evolves. Lawrence explains why an LLC is a legal shell, not a tax status, and how to time a shift from sole proprietor to S corporation as profits grow. From there, we dive into bonus depreciation and asset strategy for studios, labs, and print shops—how to expense gear in the year you buy it, when to spread deductions, and why leasing isn’t a shortcut to bigger write-offs. She also walks through a crucial point for anyone planning an exit: buyers and banks focus on the last three years, so a business needs clean books that show profit while still using assets and intangibles to optimize taxes.
The conversation gets practical fast on compliance and audits. Bank statements aren’t enough; receipts prove purpose. We share simple systems for digital receipts, the 75-dollar rule, and the pitfalls of vehicle deductions when personal use overlaps. We also reframe your website and SEO as intangible assets to amortize, not just marketing spend—especially relevant for photo retailers and labs whose storefronts now live online. On cash flow, Lawrence breaks the P&L myth and shows how principal payments and owner draws drain cash, even when profits look strong. For seasonal operators, we outline a multi-account setup that moves peak revenue out of sight and keeps the lights on in the slow months.
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Hosted and produced by Gary Pageau
Edited by Olivia Pageau
Announcer: Erin Manning
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Erin Manning (00:01):
Welcome to the Dead Pixels Society Podcast, the
photoimaging industry's leadingnews source.
Here's your host, Gary Pageau.
The Dead Pixels Society Podcastis brought to you by Media
clip, Advertek Printing, andIndependent Photo Imagers.
Gary Pageau (00:18):
Hello again.
Welcome to the Dead PixelsSociety Podcast.
I'm your host, Gary Pageau.
And today we're joined by TanyaLawrence, who's coming to us
from Georgia.
And Tanya is an accounting andbusiness finance expert.
Tanya, welcome to the show.
Tanya Lawrence (00:33):
Thanks for having me.
Excited to be here.
Gary Pageau (00:35):
So, Tanya, tell me why you got into the finance
business.
What is it that appealed to youabout helping businesses with
their finances?
Tanya Lawrence (00:48):
So a lot of people think it's all about
math.
And I've always loved mathgrowing up and things like that.
But when I actually got intoaccounting and finances and
working with business owners, tome, I discovered that it's more
like a puzzle.
Gary Pageau (01:03):
Right.
Tanya Lawrence (01:03):
And believe it or not, I'm like terrible at
math right now because I dependso much on a calculator for all
these years.
Yeah.
Like you ask me what's two plustwo, I'm gonna have to think
about it.
Gary Pageau (01:13):
But that's the new math too.
So that's a whole other thing.
Tanya Lawrence (01:16):
Yeah.
Oh yeah, that's a whole otherthing.
But in general, like financesis a really big puzzle, and it's
kind of exciting once it goesin together.
And that's like my favoritepart working with business
owners is like once we put thepuzzle of finances and
accounting together, it's like alight bulb goes on that's like,
oh, oh, okay, now I get it.
Gary Pageau (01:38):
So let's talk about that puzzle because there's
different pieces of a business'sobjectives, right?
I mean, they may be an assetout, you know, gathering
strategy where they're trying tobuild up a company to sell, or
they could be just trying to runa business profitably and not
worrying about building assetsand kind of things.
So when you're talking tobusinesses, um, how important is
(02:00):
their overall strategy in theconversations you're having with
them?
Tanya Lawrence (02:05):
So when it comes specifically tax strategy, it's
extremely important becausebelieve it or not, taxes is your
biggest expense.
You think most people think,oh, it's payroll, but in
reality, it's taxes because offof your profits, especially if
you're in the high bracket,you're almost paying 40%.
And then if you're in like astate that also collects taxes,
(02:26):
you're paying in taxes over 50%of your net income.
Right.
So when it comes to taxes, thestrategy is extremely important.
And a lot of times people justbecause don't know like the law
and things like that, they fallout of compliance.
That's like the most commonthing I've seen is people are
not in compliance.
And just because you don't knowthe law doesn't excuse you from
(02:50):
it.
So I would say it's extremelyimportant.
I should be number one oneveryone's list, but it's
usually not, it's on the backburner.
Gary Pageau (02:59):
Well, no, because no one gets into business to pay
taxes.
I mean, that's exactly it'slike wow, I can't wait to start
my photography store so I canpay 50% of my net income to
taxes.
Boy, that that is something I'mreally excited about.
Right.
Typically, not what they want todo.
But yeah, you know, a lot ofpeople's business strategy are
(03:20):
around either, you know, taxminimalization or tax avoidance.
And you know, I don't reallywant to get into that per se,
but you know, but taxes are,like you said, a major expense.
And so you may want to reducethat uh by doing what kind of
strategies.
Tanya Lawrence (03:38):
So I would say the number one strategy that
would really help you is to makesure that you're in the correct
tax entity.
And I say specifically taxentity because an LLC is not a
tax entity.
An LLC, which a lot of peoplethink, oh, I'm an LLC, I say
money on taxes.
That's not really the casebecause DIRS actually does not
(04:00):
recognize an LLC.
That's on the state level.
An LLC still has to pick a taxentity.
However, LLCs are still thebest, in my opinion, because the
LLC is the only one, the onlyone that can switch entities as
you grow.
So I always recommend whenyou're starting out, get an LLC,
file your taxes as a soleproprietor, the easiest way.
(04:22):
And as you grow, then youswitch to an S corporation, or
if you really grow and want tosell, maybe even a C
corporation.
Gary Pageau (04:29):
So what are the differences between those?
Because I know you know,probably a lot of my audience
are one of those, but what aresome of the differences between
them?
Like let's just starting withan LLC.
Let's say, for example, I'mstarting a uh a print shop now
with an LLC, I can haveemployees, right?
Tanya Lawrence (04:49):
You can have employees in any entity, even
just a sole prop.
But an LLC, this is where youreally separate yourself between
you and your business.
But as far as like employees,they go into any entity.
The real um tax strategy comesin between not necessarily with
employees, but between the ownerand the company.
(05:09):
Um, there's additional like taxsavings that as you grow, that
you wouldn't need because you'reinitially investing so much
money, you're losing, you haveso many expenses.
But as you grow and you switchto like an S corporation, you
have more tax strategies, moreopen doors because of how the
tax system is structured.
(05:30):
The tax code is structured.
Gary Pageau (05:32):
When you're talking about like extracting money out
of the business, right, as anas an owner, um, you know, you
can pay yourself a salary or awage, and that's taxed on an
individual level.
And then there's also the taxthat the business has, right?
So there's a lot of people whorun their business sort of with
a net very close to zero tominimize their uh their tax
(05:56):
burden.
What do you think about that assort of a uh because that what
wouldn't that affect your resalevalue if you're not showing
actually a great net profit atthe end?
Tanya Lawrence (06:05):
Yeah, and most people are like, oh, wait a
minute, I didn't realize that.
So, yes, if you're building abusiness to sell it, you don't
want to be showing that net.
But there are so many otherstrategies to show a positive
net but uh negative in taxes.
For example, your assets.
If you especially right nowwith this new bill coming out
(06:25):
again with the hundred percentdepreciation assets, your assets
are added back to the companyvalue, but on taxes, they're
expensed out.
So on tax purposes, if you'repurchasing assets, you are
technically saying here, this ismy depreciated expense.
So you are showing a zerotaxable income or close to zero,
(06:47):
but your company worth is notchanging, it's uh showing more.
Gary Pageau (06:51):
Okay, so go into that because that's first I've
heard of that.
So, what is the reason forthat?
Is that to encourage people tocapitalize your business or not
lease equipment?
What's the theory behind thatchange in the tax?
And you kind of go into thebackground on that.
Tanya Lawrence (07:07):
Yeah, so usually when you purchase like an
asset, so the IRS rules isanything over 500.
So if you have a computer andyou're purchasing it for $2,000,
um, you have to expense thatover five years.
Right.
That's the standard, that's thedepreciation because the
lifetime use of the computer,IRS says their computers are
good for five years, so you haveto expense it over five years.
Gary Pageau (07:30):
Even though you can use it far beyond that, just as
far as the the the quotetaxable value of that asset,
it's will be down to zero infive years.
Tanya Lawrence (07:38):
Right.
And the reason the IRS thereason that they did that is so
you still pay taxes.
You have you spent all thismoney in a company by buying
furniture, by buying computers,by buying this, and you think,
oh, I'm out of loss because mybank account shows zero dollars,
and the IRS goes, wait aminute, and no, you can't deduct
all of it in one year, youstill have to show income, you
(08:02):
still have to uh pay taxes onthat.
Right.
And a lot of people don'tunderstand that because an
expense is like your supplies,right?
So, like if you have a printer,the printer itself is an asset,
but the paper and the ink isthe supplies in it.
Yeah, so the paper and the inkgets expensed every every single
year.
But the printer, the IRS islike, if it's a thousand dollar
printer, the IRS is like, no,you have to separate that over
(08:23):
five year period.
So even though your bankaccount shows zero because of
these depreciation over acertain amount of years, the IRS
still wanted you to pay taxeswith this new bill, you can
expense it, depreciate it thefull amount in the same year.
Gary Pageau (08:41):
Oh, okay.
Tanya Lawrence (08:41):
When it cut yeah, so you don't have to
spread it over five years, andit comes into a really good
strategy.
Like, do I need to did I makeso much money this year that I
do need to depreciate all of itin one year?
Or hey, I'm actually doing notdoing so well, and I would and
I'm gonna make more money nextyear and the following year.
So I would rather use the wholefive years.
(09:04):
So that's like with thedepreciation, the tax strategy
comes a lot into play,especially like with assets and
things like that.
Gary Pageau (09:12):
Can you change your mind?
Can you like no so you have todecide that year that you
acquired equipment?
Okay, you can't let go.
Well, my year was better than Ithought, so I'm gonna change
out and switch it back to theold depreciation schedule.
You have to, you gotta stickwith the one correct.
Tanya Lawrence (09:29):
Once you decide to do it over five years, it has
to be over five years once youdecide to do it the full
depreciation, that year is done,taxes are done, year is closed,
you can't redo it.
Gary Pageau (09:39):
So, in in the photography industry industry, a
lot of equipment is leased.
Uh, lease big printers, thelease equipment.
Does that have a tax advantage?
Is there something there thatcould be uh useful for that?
Tanya Lawrence (10:34):
Well, usually the lease payments are expensed
out as a regular expense, butit's also limited to the lease.
So the printer is a thousanddollars, and I'm just using
round numbers here.
Gary Pageau (10:45):
Right.
Tanya Lawrence (10:45):
The printer is a thousand dollars, but you only
paid $300 in lease payments, youare able to uh deduct expense
out the $300 in lease payments.
It doesn't matter that theprinter costs a thousand
dollars, you're only expensingyour lease payments, and that's
usually an expense.
Gary Pageau (11:03):
Okay, because I mean, like I said, that's very
common that you know peopledon't want to bring on the
equipment and the overhead andwhatnot, especially when it's
technologically gonna be, youknow, may not even last the five
years depreciation, right?
Um, let's talk a little bitabout well, you mentioned
earlier the emotional side thatthat the finances are really
emotional.
Tanya Lawrence (11:23):
Yeah.
Gary Pageau (11:24):
Um, can you kind of explain and expand on that a
little bit?
Tanya Lawrence (11:28):
Yeah, so I'm a very logical person just by
nature, probably because I dolove numbers and they all make
sense and things like that.
But when I started working withpeople, um, and I'm like
showing them the you know thingsthey need to do, and and some
people just can't bringthemselves.
And I realized that it's veryemotional process.
(11:48):
So now I focus on like you needto figure out what works for
you.
So if you're a morning person,maybe that's when you tackle
your accounting and you're done,right?
If you're like an eveningperson, do it then.
People don't realize that it'sreally emotional, it's all tied
together.
And working with businessowners who have been audited,
(12:10):
this is why I say it's the mostimportant thing.
If you are audited, hiresomeone else because the
emotional part of being audited,you can't even organize your
numbers correctly because you'reso emotionally at you know,
really attached.
Because it's you know, yourbusiness is your baby.
You put your sweat and tearsinto it, you know, late nights,
(12:32):
no one on DRS is just looking atthe numbers, you know.
So to you, that's why it'semotional because your emotions
are tied into it.
You stayed up, you thought ofthis idea, you know.
Sometimes it took years toactually, you know, start a
printing shop or start a shop oryou know, sure, buy the
(12:52):
equipment.
Right.
So it's very emotional.
But to a person who's doingaccounting, it's like logical.
Like, what are you talkingabout?
This is what you need to do,right?
Gary Pageau (13:01):
You know, and the IRS is not emotional, right?
Tanya Lawrence (13:04):
They are no, they're not.
Gary Pageau (13:07):
They don't really care what your feelings are.
Tanya Lawrence (13:09):
They no, no, and you know, and the sad part is
they heard every excuse in thebook, so they're immune to it.
Gary Pageau (13:15):
Exactly.
So let's talk about kind ofauditing because when this
podcast drops, it'll be sort ofthe end of the year uh time
frame for a lot of the business,end of the calendar year.
What are some things, typicalsmall business, so you know, 50
employees or less, what are someof the things that they should
be doing to avoid being audited,right?
To avoid those red flags.
(13:36):
Because I know there's a lot ofpeople out there who, when they
do their taxes, kind of submitthem and just kind of cross
their fingers and kind of hopethat this won't be their year,
right?
Um, because either they'resloppy or they, you know, did it
in a rush or they didn't getprofessional help or something
like that.
What are some of the thingsthat um you see that can kind of
(13:58):
help you dodge that bullet?
Tanya Lawrence (13:59):
Be organized, get organized with your
receipts.
A lot of people think, oh, Ihave a credit card statement,
oh, I have a bank.
Everything goes through thebank.
I don't need to keep a receipt.
But when the IRS audits you,guess what's the number?
Yes, they ask for the bankstatements and the credit card
statements, but they also askfor the receipts.
And a lot of people are like,but I have it's on my credit
(14:20):
card statement.
Well, your credit cardstatement shows when it was and
where it was and how much, butit doesn't show for what it was.
The receipt is what will show.
And people are like, butthere's so many receipts.
What do I worry about?
And yes, you are supposed tokeep every receipt, believe it
or not, you are.
(14:40):
But I say, you know, don'tworry about what happened
before, just work on it nowgoing forward.
Because if you're gonna stressout, you know, oh my gosh, I
didn't save that receipt, Ididn't save that receipt, then
it's just gonna, you know, driveyou crazy.
But focus on the now and movingforward.
Like there's so many options.
You, you know, like the wholereceipt scanning, the whole
(15:02):
email, the whole even a GoogleDrive folder works, you know,
just take a picture of it, thenyou're not worried about the
receipt.
You have a you know, digitalcopy of it.
Gary Pageau (15:11):
So a digital copy is okay.
So just you're just saying havean actual record of the
receipt.
You don't necessarily need thephysical receipt itself.
It's you can have a picture ofit that kind of says you took a
client to Bob's bakery forcoffee and it cost you $12.
That won't it'll just be onyour credit card statement or
your debit card, your bankstatement.
(15:31):
It'll be, you know, you went toBob's bakery, it didn't say who
with or what for.
So you should still annotatethe receipt, right?
With who it was with and allthose fun things before you
digitize it.
Tanya Lawrence (15:42):
Yeah, I would say that.
And a lot of times, like like Isaid, I've been through a you
know multiple audits with thecustomers, they're not the tech
customers that I prepare taxesfor, it's usually customers
coming to us because they'rebeing audited.
Gary Pageau (15:56):
Right.
Tanya Lawrence (15:58):
So, and then they become our tax customer.
But what I have noticed is thatdepending on the transactions
and things like that, if it'sunder $75, I would worry less
about it.
But if it's over $75, make sureyou have that receipt.
And then, of course, you haveyour recurring ones like your
cell phone bill, like your rentpayment, you know, your office
(16:22):
internet, those are recurringones.
I wouldn't worry too much aboutgetting it every single month.
But as long as you have one youknow that repeats the same,
then it's fine.
Have your receipts emailed toyou.
That's the easiest way.
Gary Pageau (16:35):
Okay.
Tanya Lawrence (16:36):
Even the stores now are like, Do you want to
print it or email?
I'm like, email.
Gary Pageau (16:40):
Okay.
Well, I mean, that you know,no, that's good.
Maybe you have a folder on youremail thing that just receipts.
Tanya Lawrence (16:45):
Yeah, easiest way.
Gary Pageau (16:48):
Okay.
So what about like things?
I know a lot of people in theindustry use a business vehicle
for you know, maybe for personalor something like that.
Like, you know, maybe it hastheir studio name on it or
something like that.
Now, that always used to besort of like one of the perks of
(17:09):
being a business is that you,hey, you could have a vehicle
with your name on it and it'sand you can expense it, but you
can't expense all of it, right?
Tanya Lawrence (17:17):
Correct.
So vehicle is a little moretrickier, and I feel like it
gets trickier and trickier everysingle year.
But I always say, if you'resplitting it before between
personal and business, justreimburse yourself for the
miles.
That's easier way to keeptrack.
There's not much record.
But if you are using it 100%for the business, then you have
(17:40):
a personal vehicle.
Because if you don't have apersonal vehicle and you're
saying, no, no, I use this for100% for the business, what the
IRS will say is no, you don't.
It's not possible, right?
Gary Pageau (17:51):
You can't unless you can prove you Uber and you
ride your bike or you walk orsomething otherwise, right?
But that's gonna be verydifficult to prove.
Tanya Lawrence (18:00):
Correct.
Yes.
So I always say if you want toexpense out a vehicle, I want to
make sure you have a personalvehicle.
If you only have one vehicle,what we're gonna do is we're
gonna keep track of miles.
That's a much better option.
Then you don't have to worryabout, oh, I'm only depreciating
80%.
Right.
Because guess what?
When you go back and you sellthat vehicle, you're gonna have
(18:21):
to reclaim that depreciation asincome.
Gary Pageau (18:24):
Wow.
When you're looking at you knowtax rise going forward, let's
say a lot of my audience arelooking for to sell, right?
They're they plan on sellingtheir business.
Um, so like you said, they wantto max you, they should be
maximizing for net profit.
Tanya Lawrence (18:38):
Right.
To maximize net profit, but topay the least amount of taxes,
right?
You gotta focus on assetdepreciation.
Gary Pageau (18:47):
Okay.
Tanya Lawrence (18:48):
So, because then when you do go to sell the
business, you're selling thoseassets too.
Gary Pageau (18:53):
Right.
Tanya Lawrence (18:54):
You could potentially sell those off
assets.
Gary Pageau (18:57):
So, what do you mean by asset depreciation?
What is, and when you'retalking, I mean that's sort of a
technical accounting term, butfor but but for Joe Bob business
owner, what does that mean?
Tanya Lawrence (19:08):
It basically means like, and I know this
might sound funny, but like thefurniture, that's an asset.
Right.
You pay less taxes, but youdepreciate it, but it still has
value to the business.
Things like the printer, youknow, it would come with the
business and stuff like that.
Even like intangible assets,like if you bought another
(19:29):
business, so like let's sayyou're on the other side who's
buying you know, an alreadyestablished business, those are
the the goodwill, the clients,the customers of the goodwill,
that's already an asset as well.
Right.
So if you want to look atbuying assets instead of just
doing expenses, so whatever youcan say is an asset and not an
(19:52):
expense.
Gary Pageau (19:52):
Right.
How long do you think thatprocess should take to plan?
Because, like I said, I runinto when I talk to people in
the industry who are maybe youknow older and they're looking
to sell their business, and it'slike, well, I'm gonna sell in
one to two years.
Is that enough time to kind ofget your financial house in
order if maybe you weren'tmaximizing for sale during that
(20:13):
time?
Tanya Lawrence (20:13):
So what I have noticed in business sales, they
want through the last threeyears.
Gary Pageau (20:18):
Okay.
Tanya Lawrence (20:19):
And I've had customers who sold their
businesses and in differentkinds of industries, but the who
the buyer, the bank who'sgiving them a loan, always looks
back three years.
Gary Pageau (20:30):
Right.
Okay.
Because I remember used it usedto be five, as I recall, not
that long ago.
People wanted five years of theof records.
Tanya Lawrence (20:38):
Yeah, now it's more standard, there's the three
years.
Gary Pageau (20:41):
Okay.
Tanya Lawrence (20:42):
I wanted to go back a little bit on the assets,
and a lot of people don'trealize that this is an asset,
but your website, that's anasset.
And a lot of people justexpense it out because they pay
for monthly SEOs, and that'slike, oh, that's my marketing
expense.
But your website with the SEOand you building all of that in,
(21:02):
that's actually your biggestasset nowadays.
Gary Pageau (21:05):
And in my industry, right, the people are
conducting business over thewebsite, right?
They've got a uh, you know,they're taking orders, people
are uploading pictures and doingall those things primarily
through the website.
So you're right.
That is so how is that valued,right?
I mean, it's that that's valuedprobably differently than a
(21:26):
piece of furniture, right?
Tanya Lawrence (21:28):
So that would be like a business valuation,
right?
So somebody who specializes inthat would give would assign it
a value.
But I'm saying for your taxes,usually people just write it,
oh, my marketing expense.
But on if you flip it and putit on the balance sheet as
you're investing into yourwebsite, into the monthly SEO
(21:48):
and things like that, right?
Then you amortize it, which isequivalent to depreciation
because it's really anintangible method, right?
Then you look much better ontaxes.
Gary Pageau (21:59):
That's interesting.
So I mean, do you have clientswho have do a substantial
portion of their business oftheir business on the internet?
And I do, yeah.
And then that's something theyhave to cope with, right?
Tanya Lawrence (22:11):
Right.
Gary Pageau (22:12):
Interesting, interesting.
Tanya Lawrence (22:14):
But I mean, any business who has a website,
that's already their asset.
But a lot of people don't eventhink like that.
Gary Pageau (22:20):
Yeah, I wasn't thinking about it either.
Like I said, I would think Iwould think of more than an
expense, but yeah, especially ifyou may have custom software
you put into the website, right?
That's intellectual property,and that has a value.
Tanya Lawrence (22:32):
Yeah.
Gary Pageau (22:33):
So another thing besides taxes that impact people
is, of course, cash flow.
And and that's one of thethings that you know, everyone
says cash is king or whatever.
And it seems harder and harderthese days to manage cash flow.
Why, you know, why is that?
What's happening with?
I mean, I think a lot of itmight even be, you know, digital
transactions and all those kindof things are hindering how
(22:53):
people can manage their cash.
Tanya Lawrence (22:56):
Yeah.
So the biggest thing when witha business owner and or
whoever's, you know, running thebusiness is they get a report,
which is a profit and loss.
And so on the profit and loss,you have your income in, all the
gross income, and then you havea list of your expenses, and
then it says in pretty big blackletters, hopefully, net profit,
right?
Gary Pageau (23:16):
And then you don't want to see red there.
You want to see black.
Tanya Lawrence (23:19):
No.
Yeah.
But then you're like, okay, itsays I made a thousand dollars,
but my bank account shows tendollars.
Gary Pageau (23:27):
Right.
Tanya Lawrence (23:27):
Where's the rest of the money?
Gary Pageau (23:29):
Right, yeah, yeah.
Tanya Lawrence (23:30):
So I think the biggest issue for cash flow is
people don't understand thatloan payments, you know, other
payments that come in, like carpayments, they do not come on
the balance for profit and loss,but they affect the principal.
They affect the money thatcomes out of your account.
So most businesses only look atthe profit and loss, and they
(23:51):
completely forget to look at thebalance sheet.
Right.
And there is no, unfortunately,report that combines the two,
right?
Unless you literally have tocreate a custom report that
actually shows the transactionsthat are coming out.
Gary Pageau (24:04):
And and and the appropriate cash flow will kind
of affect the business, right?
I mean, I mean, type ofbusiness that it is.
Some businesses don't justbecause of the nature of the
business, don't have a lot offree cash flow, and others do.
Now, what are yourrecommendations for businesses
like the photography industry orthe printing industry that are
(24:25):
wildly seasonal, right?
We're in the fourth quarterright now, and this is like the
busy season.
And for many things from aprofit standpoint, it's got to
carry them through the year.
Tanya Lawrence (24:35):
So I always uh recommend doing a budget, and I
know of course that, but isthere uh you know things they
can do in terms of uh cash flowmanagement to kind of to to to
uh to approve that burgeon?
Gary Pageau (24:49):
I'm hoping most of my listeners have a budget, and
I'm looking right at you guys.
You better have a budget atleast.
Tanya Lawrence (24:56):
And what I've noticed is for people to uh make
better decisions and just bemore effective, you have to make
it as easy as possible foryourself.
Gary Pageau (25:07):
Right.
Tanya Lawrence (25:07):
And I know it kind of sounds silly, and like
even me with in my business, I'mlike, how can I make it more
easier for my clients, moreeasier for my employees?
Because then it's easier to do.
So I don't know if you rememberbefore like all these banks and
stuff like that, there was likean envelope budget system.
Like they even have thoseenvelopes, right?
So you put this money and stufflike that.
(25:29):
I always recommend, especiallyfor people in the seasonal like
that, is have multiple bankaccounts.
Gary Pageau (25:36):
Right.
Tanya Lawrence (25:37):
And you have your standard bank account,
which should be a big bank likeBank of America, Chase, Well
Spargo, that does everydaytransactions that has great you
know, customer service that canfix things, that you know,
whatever.
And then you should have yoursavings or actually prefer money
markets instead, for like yourincome over the next six months
(25:59):
over the years.
So if you are in a busy seasonnow, your money should come in,
but then you should move itevery time it comes in.
I know it's hard, or like oncea week, move it over to your
income for going forward.
So then it's out of mind, outof sight.
It's much harder to spend moneythat you don't see.
And then I say for youremergency fund, make it so
(26:20):
difficult to take money out thatyou physically have to go to
the bank.
Gary Pageau (26:24):
Okay.
Tanya Lawrence (26:25):
So I say these are the local small credit
unions that and do not get adebit card.
Do not, you know, so youphysically have to go there and
get money, make it hard foryourself.
But but um as far as likemaking it easy with heavy
seasonal, put that money aside,transfer that money right away.
(26:46):
Not do not operate out of onebank account because you're
looking at it and you have totrain your brain.
You're looking at it, andbrain's like, oh look, I have
money.
But if you're moving that moneyright away and you're not
seeing it, because that's yourmoney to use off season, then
it's much easier to manage.
Make it easy for yourself,right?
Is what my recommendation.
Gary Pageau (27:07):
So one of the other issues that small businesses
have is of course controls onfinances, right?
Who has access to things?
Because hopefully you eitherhave someone you trust who's an
outside person or a CPA orsomething like that who can keep
an eye on things for you,right?
Because you know, things, youknow, there unfortunately a lot
(27:30):
of small businesses haveproblems with either uh
employees who have access toaccounts when and they're not
responsible and they're notbeing monitored and things like
that.
What are some strategies that asmall business can employ to
kind of you know keep easiertrack of their finances without
being a full-time finance cop, Iguess is the word looking for.
(27:50):
You know, what are some of thecontrols you can put in place?
Tanya Lawrence (27:55):
Um, yeah, so I would highly recommend.
Um, like if you do have anaccountant or a bookkeeper, if
you're a bigger business who hasan internal person, I would
recommend having an externalperson to review.
Like we have customers that wethey have an internal accounting
people, but we review thosetransactions to make sure that
the bills are paid correctly,that they're not overpaid.
(28:18):
Right.
Because you're right,unfortunately, and it's
mind-blowing, you know, thereare employees who just take a
little extra, extra, extra, andit adds up, you know, like you
hear horror stories on the news,and it's really hard to, you
know, again, that's where thatemotional part comes in, and
you're like, I trusted you, youknow, as my employee, and things
(28:38):
like that.
If you are a bigger cutcompany, of course, if you hire
someone outsourced, they usuallyhave insurance.
And if you are hiring, pleasehire someone with insurance
protection.
So if they do take money fromyou, you can actually sue them
and get money back, right?
You know, but if you havesomeone internally, I highly
recommend, and it doesn't haveto be like weekly, it could be
(28:59):
like on a quarterly basis, youknow, like hey, here review
these transactions.
And again, this is wherereceipts come in.
If they don't have a receipt,you know, and they're taking
payments, like, well, we're arewe sure that this money went
there?
You know, unfortunately, yeah.
And I've I've had a customerwhose employees actually tried
to scam them and it was crazy.
(29:21):
Yeah, and it was caught in timeall because we were copied on
the emails.
Gary Pageau (29:26):
Well, good.
Yeah, because I mean that Imean over the years I've heard
different stories of like, youknow, especially when you're
talking about, you know, onlinebusinesses and catalog business
where people are shippingproducts, and sometimes there
was a story years ago of acamera store that had uh
literally an employee set up aparallel shipping operation
inside the warehouse, right?
(29:47):
Where he was taking on orders,taking it out of the camera
store's inventory and shippingthem out and selling the
cameras, you know, and some andwas doing some magic on the
books to suddenly those camerasare disappearing, right?
And yeah, it took a coupleyears to find it.
I mean, that's the thing, youknow.
When you you start small withthese things and you don't know,
and they see what they can getaway with, and then over time,
(30:09):
uh it can become quitesubstantial.
And like you and what cansomeone do when they're I mean,
other than file criminalcharges, uh, what can they do,
right?
Tanya Lawrence (30:18):
Right.
Unfortunately, not much.
That's the sad part, you know?
Gary Pageau (30:22):
Right.
Tanya Lawrence (30:23):
Take you'd have to just take that as a loss.
But yeah, especially withinventory, and that's why people
don't realize that's why youhave to do inventory, like
calculations at least once ayear.
Right.
And so many people don't do itbecause they're like, oh, I
don't I don't have time.
Gary Pageau (30:38):
Right.
Tanya Lawrence (30:39):
And it is tedious.
I get it, you know.
But if you have inventory, youdefinitely need to review once a
year.
Gary Pageau (30:45):
Yeah.
Because if you don't, it couldbe walking out the back door and
you're not even knowing.
Tanya Lawrence (30:48):
Exactly.
Unfortunately.
These are like the horrorstories.
Gary Pageau (30:53):
But you know, we we want the listeners of the Dead
Pixel Society podcast to notexperience horror stories.
I mean, that's right.
And we just so great.
Tanya Lawrence (31:02):
Better safe than sorry.
Gary Pageau (31:04):
Exactly.
Well, you know, a lot of whatyou're talking about is kind of
business 101 stuff, which Ithink is important to review and
reinforce because a lot oftimes, you know, when technology
comes into play where peoplecan do these things, like you
said, debit cards to keep trackof expenses and things like
(31:25):
that, which sound great.
Oh, it's easier, but you may becreating a problem for yourself
if you can't actually verifywhat these things are and and
how they fit into your taxstrategy.
So, where can people go formore information to find out
about Golden Apple Agency andthe things you do?
Tanya Lawrence (31:42):
Yeah, so my website is
goldenappleagencyinc.com.
Gary Pageau (31:46):
Okay.
Tanya Lawrence (31:47):
And then I'm also on LinkedIn.
People can just connectdirectly with me, Tanya
Lawrence.
From Jacksonville, even thoughI'm technically in Georgia, but
my main office is inJacksonville, Florida.
Gary Pageau (31:58):
Okay.
Awesome.
Well, thank you so much, Tanya.
It's been great to talking toyou.
You've kind of uh surprised meon some things, made me think
about some others.
So I appreciate your time andthank you so much.
Tanya Lawrence (32:08):
Thank you.
Erin Manning (32:10):
Thank you for listening to the Dead Pixels
Society podcast.
Read more great stories andsign up for the newsletter at
www.theadpixels society dot com.
Welcome to the Dead Pixels Society Podcast, the
photoimaging industry's leadingnews source.
Here's your host, Gary Pageau.
The Dead Pixels Society Podcastis brought to you by Media
clip, Advertek Printing, andIndependent Photo Imagers.
Gary Pageau (00:18):
Hello again.
Welcome to the Dead PixelsSociety Podcast.
I'm your host, Gary Pageau.
And today we're joined by TanyaLawrence, who's coming to us
from Georgia.
And Tanya is an accounting andbusiness finance expert.
Tanya, welcome to the show.
Tanya Lawrence (00:33):
Thanks for having me.
Excited to be here.
Gary Pageau (00:35):
So, Tanya, tell me why you got into the finance
business.
What is it that appealed to youabout helping businesses with
their finances?
Tanya Lawrence (00:48):
So a lot of people think it's all about
math.
And I've always loved mathgrowing up and things like that.
But when I actually got intoaccounting and finances and
working with business owners, tome, I discovered that it's more
like a puzzle.
Gary Pageau (01:03):
Right.
Tanya Lawrence (01:03):
And believe it or not, I'm like terrible at
math right now because I dependso much on a calculator for all
these years.
Yeah.
Like you ask me what's two plustwo, I'm gonna have to think
about it.
Gary Pageau (01:13):
But that's the new math too.
So that's a whole other thing.
Tanya Lawrence (01:16):
Yeah.
Oh yeah, that's a whole otherthing.
But in general, like financesis a really big puzzle, and it's
kind of exciting once it goesin together.
And that's like my favoritepart working with business
owners is like once we put thepuzzle of finances and
accounting together, it's like alight bulb goes on that's like,
oh, oh, okay, now I get it.
Gary Pageau (01:38):
So let's talk about that puzzle because there's
different pieces of a business'sobjectives, right?
I mean, they may be an assetout, you know, gathering
strategy where they're trying tobuild up a company to sell, or
they could be just trying to runa business profitably and not
worrying about building assetsand kind of things.
So when you're talking tobusinesses, um, how important is
(02:00):
their overall strategy in theconversations you're having with
them?
Tanya Lawrence (02:05):
So when it comes specifically tax strategy, it's
extremely important becausebelieve it or not, taxes is your
biggest expense.
You think most people think,oh, it's payroll, but in
reality, it's taxes because offof your profits, especially if
you're in the high bracket,you're almost paying 40%.
And then if you're in like astate that also collects taxes,
(02:26):
you're paying in taxes over 50%of your net income.
Right.
So when it comes to taxes, thestrategy is extremely important.
And a lot of times people justbecause don't know like the law
and things like that, they fallout of compliance.
That's like the most commonthing I've seen is people are
not in compliance.
And just because you don't knowthe law doesn't excuse you from
(02:50):
it.
So I would say it's extremelyimportant.
I should be number one oneveryone's list, but it's
usually not, it's on the backburner.
Gary Pageau (02:59):
Well, no, because no one gets into business to pay
taxes.
I mean, that's exactly it'slike wow, I can't wait to start
my photography store so I canpay 50% of my net income to
taxes.
Boy, that that is something I'mreally excited about.
Right.
Typically, not what they want todo.
But yeah, you know, a lot ofpeople's business strategy are
(03:20):
around either, you know, taxminimalization or tax avoidance.
And you know, I don't reallywant to get into that per se,
but you know, but taxes are,like you said, a major expense.
And so you may want to reducethat uh by doing what kind of
strategies.
Tanya Lawrence (03:38):
So I would say the number one strategy that
would really help you is to makesure that you're in the correct
tax entity.
And I say specifically taxentity because an LLC is not a
tax entity.
An LLC, which a lot of peoplethink, oh, I'm an LLC, I say
money on taxes.
That's not really the casebecause DIRS actually does not
(04:00):
recognize an LLC.
That's on the state level.
An LLC still has to pick a taxentity.
However, LLCs are still thebest, in my opinion, because the
LLC is the only one, the onlyone that can switch entities as
you grow.
So I always recommend whenyou're starting out, get an LLC,
file your taxes as a soleproprietor, the easiest way.
(04:22):
And as you grow, then youswitch to an S corporation, or
if you really grow and want tosell, maybe even a C
corporation.
Gary Pageau (04:29):
So what are the differences between those?
Because I know you know,probably a lot of my audience
are one of those, but what aresome of the differences between
them?
Like let's just starting withan LLC.
Let's say, for example, I'mstarting a uh a print shop now
with an LLC, I can haveemployees, right?
Tanya Lawrence (04:49):
You can have employees in any entity, even
just a sole prop.
But an LLC, this is where youreally separate yourself between
you and your business.
But as far as like employees,they go into any entity.
The real um tax strategy comesin between not necessarily with
employees, but between the ownerand the company.
(05:09):
Um, there's additional like taxsavings that as you grow, that
you wouldn't need because you'reinitially investing so much
money, you're losing, you haveso many expenses.
But as you grow and you switchto like an S corporation, you
have more tax strategies, moreopen doors because of how the
tax system is structured.
(05:30):
The tax code is structured.
Gary Pageau (05:32):
When you're talking about like extracting money out
of the business, right, as anas an owner, um, you know, you
can pay yourself a salary or awage, and that's taxed on an
individual level.
And then there's also the taxthat the business has, right?
So there's a lot of people whorun their business sort of with
a net very close to zero tominimize their uh their tax
(05:56):
burden.
What do you think about that assort of a uh because that what
wouldn't that affect your resalevalue if you're not showing
actually a great net profit atthe end?
Tanya Lawrence (06:05):
Yeah, and most people are like, oh, wait a
minute, I didn't realize that.
So, yes, if you're building abusiness to sell it, you don't
want to be showing that net.
But there are so many otherstrategies to show a positive
net but uh negative in taxes.
For example, your assets.
If you especially right nowwith this new bill coming out
(06:25):
again with the hundred percentdepreciation assets, your assets
are added back to the companyvalue, but on taxes, they're
expensed out.
So on tax purposes, if you'repurchasing assets, you are
technically saying here, this ismy depreciated expense.
So you are showing a zerotaxable income or close to zero,
(06:47):
but your company worth is notchanging, it's uh showing more.
Gary Pageau (06:51):
Okay, so go into that because that's first I've
heard of that.
So, what is the reason forthat?
Is that to encourage people tocapitalize your business or not
lease equipment?
What's the theory behind thatchange in the tax?
And you kind of go into thebackground on that.
Tanya Lawrence (07:07):
Yeah, so usually when you purchase like an
asset, so the IRS rules isanything over 500.
So if you have a computer andyou're purchasing it for $2,000,
um, you have to expense thatover five years.
Right.
That's the standard, that's thedepreciation because the
lifetime use of the computer,IRS says their computers are
good for five years, so you haveto expense it over five years.
Gary Pageau (07:30):
Even though you can use it far beyond that, just as
far as the the the quotetaxable value of that asset,
it's will be down to zero infive years.
Tanya Lawrence (07:38):
Right.
And the reason the IRS thereason that they did that is so
you still pay taxes.
You have you spent all thismoney in a company by buying
furniture, by buying computers,by buying this, and you think,
oh, I'm out of loss because mybank account shows zero dollars,
and the IRS goes, wait aminute, and no, you can't deduct
all of it in one year, youstill have to show income, you
(08:02):
still have to uh pay taxes onthat.
Right.
And a lot of people don'tunderstand that because an
expense is like your supplies,right?
So, like if you have a printer,the printer itself is an asset,
but the paper and the ink isthe supplies in it.
Yeah, so the paper and the inkgets expensed every every single
year.
But the printer, the IRS islike, if it's a thousand dollar
printer, the IRS is like, no,you have to separate that over
(08:23):
five year period.
So even though your bankaccount shows zero because of
these depreciation over acertain amount of years, the IRS
still wanted you to pay taxeswith this new bill, you can
expense it, depreciate it thefull amount in the same year.
Gary Pageau (08:41):
Oh, okay.
Tanya Lawrence (08:41):
When it cut yeah, so you don't have to
spread it over five years, andit comes into a really good
strategy.
Like, do I need to did I makeso much money this year that I
do need to depreciate all of itin one year?
Or hey, I'm actually doing notdoing so well, and I would and
I'm gonna make more money nextyear and the following year.
So I would rather use the wholefive years.
(09:04):
So that's like with thedepreciation, the tax strategy
comes a lot into play,especially like with assets and
things like that.
Gary Pageau (09:12):
Can you change your mind?
Can you like no so you have todecide that year that you
acquired equipment?
Okay, you can't let go.
Well, my year was better than Ithought, so I'm gonna change
out and switch it back to theold depreciation schedule.
You have to, you gotta stickwith the one correct.
Tanya Lawrence (09:29):
Once you decide to do it over five years, it has
to be over five years once youdecide to do it the full
depreciation, that year is done,taxes are done, year is closed,
you can't redo it.
Gary Pageau (09:39):
So, in in the photography industry industry, a
lot of equipment is leased.
Uh, lease big printers, thelease equipment.
Does that have a tax advantage?
Is there something there thatcould be uh useful for that?
Tanya Lawrence (10:34):
Well, usually the lease payments are expensed
out as a regular expense, butit's also limited to the lease.
So the printer is a thousanddollars, and I'm just using
round numbers here.
Gary Pageau (10:45):
Right.
Tanya Lawrence (10:45):
The printer is a thousand dollars, but you only
paid $300 in lease payments, youare able to uh deduct expense
out the $300 in lease payments.
It doesn't matter that theprinter costs a thousand
dollars, you're only expensingyour lease payments, and that's
usually an expense.
Gary Pageau (11:03):
Okay, because I mean, like I said, that's very
common that you know peopledon't want to bring on the
equipment and the overhead andwhatnot, especially when it's
technologically gonna be, youknow, may not even last the five
years depreciation, right?
Um, let's talk a little bitabout well, you mentioned
earlier the emotional side thatthat the finances are really
emotional.
Tanya Lawrence (11:23):
Yeah.
Gary Pageau (11:24):
Um, can you kind of explain and expand on that a
little bit?
Tanya Lawrence (11:28):
Yeah, so I'm a very logical person just by
nature, probably because I dolove numbers and they all make
sense and things like that.
But when I started working withpeople, um, and I'm like
showing them the you know thingsthey need to do, and and some
people just can't bringthemselves.
And I realized that it's veryemotional process.
(11:48):
So now I focus on like you needto figure out what works for
you.
So if you're a morning person,maybe that's when you tackle
your accounting and you're done,right?
If you're like an eveningperson, do it then.
People don't realize that it'sreally emotional, it's all tied
together.
And working with businessowners who have been audited,
(12:10):
this is why I say it's the mostimportant thing.
If you are audited, hiresomeone else because the
emotional part of being audited,you can't even organize your
numbers correctly because you'reso emotionally at you know,
really attached.
Because it's you know, yourbusiness is your baby.
You put your sweat and tearsinto it, you know, late nights,
(12:32):
no one on DRS is just looking atthe numbers, you know.
So to you, that's why it'semotional because your emotions
are tied into it.
You stayed up, you thought ofthis idea, you know.
Sometimes it took years toactually, you know, start a
printing shop or start a shop oryou know, sure, buy the
(12:52):
equipment.
Right.
So it's very emotional.
But to a person who's doingaccounting, it's like logical.
Like, what are you talkingabout?
This is what you need to do,right?
Gary Pageau (13:01):
You know, and the IRS is not emotional, right?
Tanya Lawrence (13:04):
They are no, they're not.
Gary Pageau (13:07):
They don't really care what your feelings are.
Tanya Lawrence (13:09):
They no, no, and you know, and the sad part is
they heard every excuse in thebook, so they're immune to it.
Gary Pageau (13:15):
Exactly.
So let's talk about kind ofauditing because when this
podcast drops, it'll be sort ofthe end of the year uh time
frame for a lot of the business,end of the calendar year.
What are some things, typicalsmall business, so you know, 50
employees or less, what are someof the things that they should
be doing to avoid being audited,right?
To avoid those red flags.
(13:36):
Because I know there's a lot ofpeople out there who, when they
do their taxes, kind of submitthem and just kind of cross
their fingers and kind of hopethat this won't be their year,
right?
Um, because either they'resloppy or they, you know, did it
in a rush or they didn't getprofessional help or something
like that.
What are some of the thingsthat um you see that can kind of
(13:58):
help you dodge that bullet?
Tanya Lawrence (13:59):
Be organized, get organized with your
receipts.
A lot of people think, oh, Ihave a credit card statement,
oh, I have a bank.
Everything goes through thebank.
I don't need to keep a receipt.
But when the IRS audits you,guess what's the number?
Yes, they ask for the bankstatements and the credit card
statements, but they also askfor the receipts.
And a lot of people are like,but I have it's on my credit
(14:20):
card statement.
Well, your credit cardstatement shows when it was and
where it was and how much, butit doesn't show for what it was.
The receipt is what will show.
And people are like, butthere's so many receipts.
What do I worry about?
And yes, you are supposed tokeep every receipt, believe it
or not, you are.
(14:40):
But I say, you know, don'tworry about what happened
before, just work on it nowgoing forward.
Because if you're gonna stressout, you know, oh my gosh, I
didn't save that receipt, Ididn't save that receipt, then
it's just gonna, you know, driveyou crazy.
But focus on the now and movingforward.
Like there's so many options.
You, you know, like the wholereceipt scanning, the whole
(15:02):
email, the whole even a GoogleDrive folder works, you know,
just take a picture of it, thenyou're not worried about the
receipt.
You have a you know, digitalcopy of it.
Gary Pageau (15:11):
So a digital copy is okay.
So just you're just saying havean actual record of the
receipt.
You don't necessarily need thephysical receipt itself.
It's you can have a picture ofit that kind of says you took a
client to Bob's bakery forcoffee and it cost you $12.
That won't it'll just be onyour credit card statement or
your debit card, your bankstatement.
(15:31):
It'll be, you know, you went toBob's bakery, it didn't say who
with or what for.
So you should still annotatethe receipt, right?
With who it was with and allthose fun things before you
digitize it.
Tanya Lawrence (15:42):
Yeah, I would say that.
And a lot of times, like like Isaid, I've been through a you
know multiple audits with thecustomers, they're not the tech
customers that I prepare taxesfor, it's usually customers
coming to us because they'rebeing audited.
Gary Pageau (15:56):
Right.
Tanya Lawrence (15:58):
So, and then they become our tax customer.
But what I have noticed is thatdepending on the transactions
and things like that, if it'sunder $75, I would worry less
about it.
But if it's over $75, make sureyou have that receipt.
And then, of course, you haveyour recurring ones like your
cell phone bill, like your rentpayment, you know, your office
(16:22):
internet, those are recurringones.
I wouldn't worry too much aboutgetting it every single month.
But as long as you have one youknow that repeats the same,
then it's fine.
Have your receipts emailed toyou.
That's the easiest way.
Gary Pageau (16:35):
Okay.
Tanya Lawrence (16:36):
Even the stores now are like, Do you want to
print it or email?
I'm like, email.
Gary Pageau (16:40):
Okay.
Well, I mean, that you know,no, that's good.
Maybe you have a folder on youremail thing that just receipts.
Tanya Lawrence (16:45):
Yeah, easiest way.
Gary Pageau (16:48):
Okay.
So what about like things?
I know a lot of people in theindustry use a business vehicle
for you know, maybe for personalor something like that.
Like, you know, maybe it hastheir studio name on it or
something like that.
Now, that always used to besort of like one of the perks of
(17:09):
being a business is that you,hey, you could have a vehicle
with your name on it and it'sand you can expense it, but you
can't expense all of it, right?
Tanya Lawrence (17:17):
Correct.
So vehicle is a little moretrickier, and I feel like it
gets trickier and trickier everysingle year.
But I always say, if you'resplitting it before between
personal and business, justreimburse yourself for the
miles.
That's easier way to keeptrack.
There's not much record.
But if you are using it 100%for the business, then you have
(17:40):
a personal vehicle.
Because if you don't have apersonal vehicle and you're
saying, no, no, I use this for100% for the business, what the
IRS will say is no, you don't.
It's not possible, right?
Gary Pageau (17:51):
You can't unless you can prove you Uber and you
ride your bike or you walk orsomething otherwise, right?
But that's gonna be verydifficult to prove.
Tanya Lawrence (18:00):
Correct.
Yes.
So I always say if you want toexpense out a vehicle, I want to
make sure you have a personalvehicle.
If you only have one vehicle,what we're gonna do is we're
gonna keep track of miles.
That's a much better option.
Then you don't have to worryabout, oh, I'm only depreciating
80%.
Right.
Because guess what?
When you go back and you sellthat vehicle, you're gonna have
(18:21):
to reclaim that depreciation asincome.
Gary Pageau (18:24):
Wow.
When you're looking at you knowtax rise going forward, let's
say a lot of my audience arelooking for to sell, right?
They're they plan on sellingtheir business.
Um, so like you said, they wantto max you, they should be
maximizing for net profit.
Tanya Lawrence (18:38):
Right.
To maximize net profit, but topay the least amount of taxes,
right?
You gotta focus on assetdepreciation.
Gary Pageau (18:47):
Okay.
Tanya Lawrence (18:48):
So, because then when you do go to sell the
business, you're selling thoseassets too.
Gary Pageau (18:53):
Right.
Tanya Lawrence (18:54):
You could potentially sell those off
assets.
Gary Pageau (18:57):
So, what do you mean by asset depreciation?
What is, and when you'retalking, I mean that's sort of a
technical accounting term, butfor but but for Joe Bob business
owner, what does that mean?
Tanya Lawrence (19:08):
It basically means like, and I know this
might sound funny, but like thefurniture, that's an asset.
Right.
You pay less taxes, but youdepreciate it, but it still has
value to the business.
Things like the printer, youknow, it would come with the
business and stuff like that.
Even like intangible assets,like if you bought another
(19:29):
business, so like let's sayyou're on the other side who's
buying you know, an alreadyestablished business, those are
the the goodwill, the clients,the customers of the goodwill,
that's already an asset as well.
Right.
So if you want to look atbuying assets instead of just
doing expenses, so whatever youcan say is an asset and not an
(19:52):
expense.
Gary Pageau (19:52):
Right.
How long do you think thatprocess should take to plan?
Because, like I said, I runinto when I talk to people in
the industry who are maybe youknow older and they're looking
to sell their business, and it'slike, well, I'm gonna sell in
one to two years.
Is that enough time to kind ofget your financial house in
order if maybe you weren'tmaximizing for sale during that
(20:13):
time?
Tanya Lawrence (20:13):
So what I have noticed in business sales, they
want through the last threeyears.
Gary Pageau (20:18):
Okay.
Tanya Lawrence (20:19):
And I've had customers who sold their
businesses and in differentkinds of industries, but the who
the buyer, the bank who'sgiving them a loan, always looks
back three years.
Gary Pageau (20:30):
Right.
Okay.
Because I remember used it usedto be five, as I recall, not
that long ago.
People wanted five years of theof records.
Tanya Lawrence (20:38):
Yeah, now it's more standard, there's the three
years.
Gary Pageau (20:41):
Okay.
Tanya Lawrence (20:42):
I wanted to go back a little bit on the assets,
and a lot of people don'trealize that this is an asset,
but your website, that's anasset.
And a lot of people justexpense it out because they pay
for monthly SEOs, and that'slike, oh, that's my marketing
expense.
But your website with the SEOand you building all of that in,
(21:02):
that's actually your biggestasset nowadays.
Gary Pageau (21:05):
And in my industry, right, the people are
conducting business over thewebsite, right?
They've got a uh, you know,they're taking orders, people
are uploading pictures and doingall those things primarily
through the website.
So you're right.
That is so how is that valued,right?
I mean, it's that that's valuedprobably differently than a
(21:26):
piece of furniture, right?
Tanya Lawrence (21:28):
So that would be like a business valuation,
right?
So somebody who specializes inthat would give would assign it
a value.
But I'm saying for your taxes,usually people just write it,
oh, my marketing expense.
But on if you flip it and putit on the balance sheet as
you're investing into yourwebsite, into the monthly SEO
(21:48):
and things like that, right?
Then you amortize it, which isequivalent to depreciation
because it's really anintangible method, right?
Then you look much better ontaxes.
Gary Pageau (21:59):
That's interesting.
So I mean, do you have clientswho have do a substantial
portion of their business oftheir business on the internet?
And I do, yeah.
And then that's something theyhave to cope with, right?
Tanya Lawrence (22:11):
Right.
Gary Pageau (22:12):
Interesting, interesting.
Tanya Lawrence (22:14):
But I mean, any business who has a website,
that's already their asset.
But a lot of people don't eventhink like that.
Gary Pageau (22:20):
Yeah, I wasn't thinking about it either.
Like I said, I would think Iwould think of more than an
expense, but yeah, especially ifyou may have custom software
you put into the website, right?
That's intellectual property,and that has a value.
Tanya Lawrence (22:32):
Yeah.
Gary Pageau (22:33):
So another thing besides taxes that impact people
is, of course, cash flow.
And and that's one of thethings that you know, everyone
says cash is king or whatever.
And it seems harder and harderthese days to manage cash flow.
Why, you know, why is that?
What's happening with?
I mean, I think a lot of itmight even be, you know, digital
transactions and all those kindof things are hindering how
(22:53):
people can manage their cash.
Tanya Lawrence (22:56):
Yeah.
So the biggest thing when witha business owner and or
whoever's, you know, running thebusiness is they get a report,
which is a profit and loss.
And so on the profit and loss,you have your income in, all the
gross income, and then you havea list of your expenses, and
then it says in pretty big blackletters, hopefully, net profit,
right?
Gary Pageau (23:16):
And then you don't want to see red there.
You want to see black.
Tanya Lawrence (23:19):
No.
Yeah.
But then you're like, okay, itsays I made a thousand dollars,
but my bank account shows tendollars.
Gary Pageau (23:27):
Right.
Tanya Lawrence (23:27):
Where's the rest of the money?
Gary Pageau (23:29):
Right, yeah, yeah.
Tanya Lawrence (23:30):
So I think the biggest issue for cash flow is
people don't understand thatloan payments, you know, other
payments that come in, like carpayments, they do not come on
the balance for profit and loss,but they affect the principal.
They affect the money thatcomes out of your account.
So most businesses only look atthe profit and loss, and they
(23:51):
completely forget to look at thebalance sheet.
Right.
And there is no, unfortunately,report that combines the two,
right?
Unless you literally have tocreate a custom report that
actually shows the transactionsthat are coming out.
Gary Pageau (24:04):
And and and the appropriate cash flow will kind
of affect the business, right?
I mean, I mean, type ofbusiness that it is.
Some businesses don't justbecause of the nature of the
business, don't have a lot offree cash flow, and others do.
Now, what are yourrecommendations for businesses
like the photography industry orthe printing industry that are
(24:25):
wildly seasonal, right?
We're in the fourth quarterright now, and this is like the
busy season.
And for many things from aprofit standpoint, it's got to
carry them through the year.
Tanya Lawrence (24:35):
So I always uh recommend doing a budget, and I
know of course that, but isthere uh you know things they
can do in terms of uh cash flowmanagement to kind of to to to
uh to approve that burgeon?
Gary Pageau (24:49):
I'm hoping most of my listeners have a budget, and
I'm looking right at you guys.
You better have a budget atleast.
Tanya Lawrence (24:56):
And what I've noticed is for people to uh make
better decisions and just bemore effective, you have to make
it as easy as possible foryourself.
Gary Pageau (25:07):
Right.
Tanya Lawrence (25:07):
And I know it kind of sounds silly, and like
even me with in my business, I'mlike, how can I make it more
easier for my clients, moreeasier for my employees?
Because then it's easier to do.
So I don't know if you rememberbefore like all these banks and
stuff like that, there was likean envelope budget system.
Like they even have thoseenvelopes, right?
So you put this money and stufflike that.
(25:29):
I always recommend, especiallyfor people in the seasonal like
that, is have multiple bankaccounts.
Gary Pageau (25:36):
Right.
Tanya Lawrence (25:37):
And you have your standard bank account,
which should be a big bank likeBank of America, Chase, Well
Spargo, that does everydaytransactions that has great you
know, customer service that canfix things, that you know,
whatever.
And then you should have yoursavings or actually prefer money
markets instead, for like yourincome over the next six months
(25:59):
over the years.
So if you are in a busy seasonnow, your money should come in,
but then you should move itevery time it comes in.
I know it's hard, or like oncea week, move it over to your
income for going forward.
So then it's out of mind, outof sight.
It's much harder to spend moneythat you don't see.
And then I say for youremergency fund, make it so
(26:20):
difficult to take money out thatyou physically have to go to
the bank.
Gary Pageau (26:24):
Okay.
Tanya Lawrence (26:25):
So I say these are the local small credit
unions that and do not get adebit card.
Do not, you know, so youphysically have to go there and
get money, make it hard foryourself.
But but um as far as likemaking it easy with heavy
seasonal, put that money aside,transfer that money right away.
(26:46):
Not do not operate out of onebank account because you're
looking at it and you have totrain your brain.
You're looking at it, andbrain's like, oh look, I have
money.
But if you're moving that moneyright away and you're not
seeing it, because that's yourmoney to use off season, then
it's much easier to manage.
Make it easy for yourself,right?
Is what my recommendation.
Gary Pageau (27:07):
So one of the other issues that small businesses
have is of course controls onfinances, right?
Who has access to things?
Because hopefully you eitherhave someone you trust who's an
outside person or a CPA orsomething like that who can keep
an eye on things for you,right?
Because you know, things, youknow, there unfortunately a lot
(27:30):
of small businesses haveproblems with either uh
employees who have access toaccounts when and they're not
responsible and they're notbeing monitored and things like
that.
What are some strategies that asmall business can employ to
kind of you know keep easiertrack of their finances without
being a full-time finance cop, Iguess is the word looking for.
(27:50):
You know, what are some of thecontrols you can put in place?
Tanya Lawrence (27:55):
Um, yeah, so I would highly recommend.
Um, like if you do have anaccountant or a bookkeeper, if
you're a bigger business who hasan internal person, I would
recommend having an externalperson to review.
Like we have customers that wethey have an internal accounting
people, but we review thosetransactions to make sure that
the bills are paid correctly,that they're not overpaid.
(28:18):
Right.
Because you're right,unfortunately, and it's
mind-blowing, you know, thereare employees who just take a
little extra, extra, extra, andit adds up, you know, like you
hear horror stories on the news,and it's really hard to, you
know, again, that's where thatemotional part comes in, and
you're like, I trusted you, youknow, as my employee, and things
(28:38):
like that.
If you are a bigger cutcompany, of course, if you hire
someone outsourced, they usuallyhave insurance.
And if you are hiring, pleasehire someone with insurance
protection.
So if they do take money fromyou, you can actually sue them
and get money back, right?
You know, but if you havesomeone internally, I highly
recommend, and it doesn't haveto be like weekly, it could be
(28:59):
like on a quarterly basis, youknow, like hey, here review
these transactions.
And again, this is wherereceipts come in.
If they don't have a receipt,you know, and they're taking
payments, like, well, we're arewe sure that this money went
there?
You know, unfortunately, yeah.
And I've I've had a customerwhose employees actually tried
to scam them and it was crazy.
(29:21):
Yeah, and it was caught in timeall because we were copied on
the emails.
Gary Pageau (29:26):
Well, good.
Yeah, because I mean that Imean over the years I've heard
different stories of like, youknow, especially when you're
talking about, you know, onlinebusinesses and catalog business
where people are shippingproducts, and sometimes there
was a story years ago of acamera store that had uh
literally an employee set up aparallel shipping operation
inside the warehouse, right?
(29:47):
Where he was taking on orders,taking it out of the camera
store's inventory and shippingthem out and selling the
cameras, you know, and some andwas doing some magic on the
books to suddenly those camerasare disappearing, right?
And yeah, it took a coupleyears to find it.
I mean, that's the thing, youknow.
When you you start small withthese things and you don't know,
and they see what they can getaway with, and then over time,
(30:09):
uh it can become quitesubstantial.
And like you and what cansomeone do when they're I mean,
other than file criminalcharges, uh, what can they do,
right?
Tanya Lawrence (30:18):
Right.
Unfortunately, not much.
That's the sad part, you know?
Gary Pageau (30:22):
Right.
Tanya Lawrence (30:23):
Take you'd have to just take that as a loss.
But yeah, especially withinventory, and that's why people
don't realize that's why youhave to do inventory, like
calculations at least once ayear.
Right.
And so many people don't do itbecause they're like, oh, I
don't I don't have time.
Gary Pageau (30:38):
Right.
Tanya Lawrence (30:39):
And it is tedious.
I get it, you know.
But if you have inventory, youdefinitely need to review once a
year.
Gary Pageau (30:45):
Yeah.
Because if you don't, it couldbe walking out the back door and
you're not even knowing.
Tanya Lawrence (30:48):
Exactly.
Unfortunately.
These are like the horrorstories.
Gary Pageau (30:53):
But you know, we we want the listeners of the Dead
Pixel Society podcast to notexperience horror stories.
I mean, that's right.
And we just so great.
Tanya Lawrence (31:02):
Better safe than sorry.
Gary Pageau (31:04):
Exactly.
Well, you know, a lot of whatyou're talking about is kind of
business 101 stuff, which Ithink is important to review and
reinforce because a lot oftimes, you know, when technology
comes into play where peoplecan do these things, like you
said, debit cards to keep trackof expenses and things like
(31:25):
that, which sound great.
Oh, it's easier, but you may becreating a problem for yourself
if you can't actually verifywhat these things are and and
how they fit into your taxstrategy.
So, where can people go formore information to find out
about Golden Apple Agency andthe things you do?
Tanya Lawrence (31:42):
Yeah, so my website is
goldenappleagencyinc.com.
Gary Pageau (31:46):
Okay.
Tanya Lawrence (31:47):
And then I'm also on LinkedIn.
People can just connectdirectly with me, Tanya
Lawrence.
From Jacksonville, even thoughI'm technically in Georgia, but
my main office is inJacksonville, Florida.
Gary Pageau (31:58):
Okay.
Awesome.
Well, thank you so much, Tanya.
It's been great to talking toyou.
You've kind of uh surprised meon some things, made me think
about some others.
So I appreciate your time andthank you so much.
Tanya Lawrence (32:08):
Thank you.
Erin Manning (32:10):
Thank you for listening to the Dead Pixels
Society podcast.
Read more great stories andsign up for the newsletter at
www.theadpixels society dot com.
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