Money Rehab with Nicole Lapin - Freelancers: This One’s For You!

Episode Date: May 5, 2022

Nicole brings on her two favorite freelancers to share the best tips for contract workers: from the ways to maximize the money in your pocket come tax season, to how to deduct your moisturizer.  We got 99 problems, but a 1099 ain't one! See omnystudio.com/listener for privacy information.

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Well, it doesn't. Charge for wasting our time. I will take a check. Like an old school check. You recognize her from anchoring on CNN, CNBC, and Bloomberg. The only financial expert you don't need a dictionary to understand. Nicole Lappin. Thankfully, tax day is behind us.

But if you're a freelancer, you may have another tax day in a few short months. Quarterly taxes is one of the many joys of being self-employed. In my experience, working for yourself is a big game of pros and cons. And the biggest con is perhaps all of the paperwork that comes with being your own boss. It's tedious, but it's also a big learning curve. And it can feel like a significant barrier to entry for someone who just wants to get into the freelancing game for the first time. But if I can do it, you can too. So let's take the intimidating factor away and start climbing that learning curve. To do that, I'm bringing on two lovely ladies that I hire for

all things glam. Tanique, who is a hairstylist extraordinaire, and Laura, who is the best makeup artist in all the land. Tanique and Laura have mastered the freelance game, and they've even taught me some tips that I want to share with you. So it is so, so wonderful for me to be able to say, Laura and Tanique, welcome to Money Rehab. Thank you for having us. Thank you for having us. Oh, the dream team. Glam Squad extraordinaire.

Y'all usually get me ready to do these things, and I am so, so eternally grateful. Can you guys start by introducing yourselves? I'd love for you to talk a little bit about your background and then how we met. So my name is Laura Bueno. I am a professional makeup artist here in Los Angeles, originally from Houston, Texas. I've been out in LA for the last eight years. And I met Nicole, I think we met in 2018 when you were promoting Superwoman. Yep. Becoming Superwoman. Yeah, you were doing all your LA promo for that. And that's how we met. And I wore cape dresses every day. Yeah. Oh my God. I love

all the dresses. I am Tanique Jones-Bell. I've been a hairstylist for, I think, like 20 years now. Oh my gosh. Since the womb. Coming out of the womb. Basically. He was doing hair. No, seriously. I have pictures of me as a three-year-old doing hair. Like a boss. California native. Been in LA for about 12 years now. And I met Nicole through Laura. Laura referred me when Nicole moved out here, actually. Yeah. For I think it was Miss Independent. We were like

conceiving that baby. We were. So it was all green dresses. Yes, it was. From pink dresses to green dresses. Because if you're going to write this many books, like you have to entertain yourself somehow. So let it be that. So over the last year or so, we've talked just in the makeup chair casually about finances and taxes and freelancing and all of that. And I think we've probably had unique conversations compared to the fancy Hollywood people conversations. I'm assuming you have not the same. But I wanted to actually just open that conversation up so other people could get some of that info too, because I'm not going to have everybody come over and hang out with me while I'm getting my face beat and hair did. So let's start from the beginning. When did you guys become freelancers? I became a freelancer probably a year after I decided to become a makeup artist, which is kind

of rare because most people wait a while, you know, start working at a salon or work at the mall. I got very fortunate and I knew I wanted to work in entertainment. So I started submitting myself to agencies in Houston and I actually got a bite and ended up going into production um a year after deciding to come into uh become a makeup artist i was working at the mall and then doing production on the side um so at that time i kind of learned both of um the w-2s and w-9 differences and learning the tax fun responsible adulting things differences and learning the tax. Fun, responsible, adulting things. But I had learned a lot about business before that, before even doing makeup, I was working in music and I got, I was hired to be a personal assistant and in charge of a fan club and then kind of became road manager on the side when we needed to be. So I was doing bands, payroll,

need to be. So I was doing bands, payroll expenses, um, advances and collecting money, depositing money. So that was kind of my schooling, my business schooling. So for anyone listening and doesn't know the difference between a W-2 and W-9, do you mind just briefly telling us? The easiest way is W-2, you get your taxes taken out. W-9, you're going to have to pay taxes on whatever you're given. That's the easiest way to explain it. T, and you found that out too. that meant that the salon would do the advertising and I would actually do the, the, the, the services on the clients. And yes, I quickly learned the difference between a W2 and a W9 as well, uh, filling out the 1099, beautiful, fun, good stuff. Um, but I do have to say, I learned some really cool, uh, things about self-care items and how they can be itemized as you know the our supplies so

that was really cool oh yeah do tell oh yeah so when i would go buy like hand lotion and like you know my body washes and all that stuff because i'm a cosmetologist that was considered tools of the trade or like some of my products. So I got to write that fun stuff off every year. So that was pretty cool as an expense. Uh, I learned that very quickly shampoo, even if it was just for myself, I can't write that off, uh, cotton balls, whatever, you know, I think I also realized that, um, there were so many deductions like to me, uh, not only on the personal stuff you're buying, but on everything you're buying. Even because I worked in entertainment,

the entertainment you were actually going to, like concerts and magazines you were buying, any of that is considered research. So there are a lot of deductions, and I think a lot of freelancers need to educate themselves on that as well, and knowing your industry and what you're working in, and how many deductions you can have. And I think it's such a benefit being a small business owner due to tax deductions that you do get. You guys are pros. You're pros in the

industry and now you're pros on figuring out taxes for freelancers. It's a tax situation that I haven't been in. So you guys have actually taught me a lot. Can you tell all of us a little bit more about what was the biggest wake up call when you were starting to get your taxes together as a freelancer versus when you work for a bigger company? I will tell you, I can't say for me that I've always been very responsible with my taxes. It's just like keeping up with the maintenance on my car, something that, you know, I just, with my taxes. It's just like keeping up with the maintenance on my car, something that, you know, I just, you have to do it regardless. I think the biggest eye-opener that I realized for people was during the shutdown. I literally had 10 people, at least 10 people contacting me, telling me who does your taxes because they hadn't done their taxes in two to three years. And if they hadn't

done their taxes in two to three years, then they weren't eligible for unemployment. So I think it was a big eye-opener to a lot of people during the shutdown, how important it is to do your taxes, not only to pay the government, but to get any government help or funding when there is what just happened, when there is, you know, what just happened when there is a pandemic. And I think that was an eye opener for a lot of freelancers, especially for Uber drivers and

not only in the hair and makeup, but for any freelancer, it was a huge eye opener, the shutdown. And I think it's just preparing yourself for things that happen. And I think that's freelance life more than anything. It's the hills. You have really highs where you're making all this money and then you get real low. So you got to understand to have that valley of savings to get you through those really high and really low times.

And I hope a lot of people learned, you know, and they studied finances and studied what they needed to do to protect themselves. Amen. T, how do you organize your finances now that you're a freelancer? If I can just go back to what Laura said about the pandemic, because that actually taught me a lot, too. It taught me about my saving style and how I save. I think all of us need to realize we

have saving styles. Like, you know, um, for me, my saving style looked like two things. It was having an emergency credit card because income is different. Uh, when you're a freelancer, sometimes you have like a lot and sometimes you are struggling. So I had that with a low interest rate and that was kind of my emergency fund, if you will. And that was very helpful during the pandemic. And then another thing I learned was my pricing. My pricing was so important because in my pricing as a freelancer, I don't get paid time off, right? I don't get life insurance or any of the insurance policies or safeties. I don't get 401ks or whatnot. So I have my prices reflect all of those things for me. Like if I have a baby, I don't get maternity leave. I don't get all that stuff. And also

like my pricing also has to do with like ins ensuring my body and things like that. So, yeah, I just wanted to piggyback on that a little bit because I feel like that's important. Super important. Super important. Big wake up calls. So how did you guys start? Laura, I know that you have an accountant who should be giving you commission, by the way, for all the work that you're giving them. But did you start an entity?

Do you file quarterly? Tell me the logistics of what goes on. So, again, that's very different depending on the person. I go back and forth on paying quarterlies, yes, no, simply because it depends on how many W-2s I have coming in. I do work for a lot of production companies it depends on how many W-2s I have coming in. I do work for a lot of production companies that do pay me with W-2s. So if I know I have a lot coming in during that year, I'm going to let it balance it out with my W-9s. Again, I have an amazing accountant who's worked in entertainment for years. So she helps me with all this.

But it really depends on the person, but it is important to pay something. If you're only doing W-9s and you're not paying something, you better guarantee you're going to have to pay at the end of the year. And it's really, now when you're establishing yourself as a business, it depends on what overhead you have on whether you want to become an LLC or be an independent. For me, it's always been an independent contractor because I have no overhead. So I just stay as an independent contractor. Now, if I decide to start a business, of course, that completely changes instead of being a sole proprietor into getting more into the business, getting into the business side of it. So all of that,

you take into consideration too, when you're starting to become a freelancer, it's like, okay, what do I want to do with this? Do I just start as myself as a sole proprietor? Or do I go on? Do I want to start an LLC because I'm going to plan to have some overhead, some assistance, this and this and that. So you have to take all that into consideration on how you're going to form yourself as a business. Yeah, absolutely. And when I was in the salon, we had to have specific, it was a little different. Now that I am a freelancer, I'm just a sole proprietor again, like Laura said, because I don't have overhead. And my accountant is amazing as well. And she taught me the difference as well.

Yeah. And I love all these lady accountants, by the way. Yeah. And also, she said if I had a certain income, I didn't really need to have a business just yet either. And that's also something I took into consideration with all that. So what are some of the biggest tips around keeping as much money as you possibly can? Because y'all work so, so hard. I mean, everybody works hard, but y'all hustle. I mean, and being a freelancer, especially around the pandemic is no joke. So what would you say to

pocket as much as you can come tax season? I say for me, the biggest thing is I just have a little app that sets up my paychecks when they come in and it takes 33% out in my savings to just kind of make sure that I have my taxes covered. Um, because it saves me in all the fees later from, you know, not paying on time. That's a big thing. Um, and just know what you can use as an expense. Like you can use your wardrobe as an expense. If you're, you have to dress in all black all the time, like there's so many things. So that's probably the biggest saver I'd say. What app do you use? Um, I was using this one called, uh, actually Laura

put me onto it. Was it capital Laura? Oh yeah. I'm still using that one i love that yeah that one went under no well i'm still using it okay yeah it's still working for me i use my bank's app now but i don't i used to use capital but i use my bank's app now yeah i think like tannic said it really matters knowing what you can expense um also having that savings having some kind there's so many apps there's so many saving apps and so many different things you can use that just whatever goes into your account, you can link to your bank account. That'll just take out the percentage that you need taken out. Like I, that's why I love that one app is because it takes 10% of everything that I do, not to mention my spending too. So anything that I swipe my card, it's taking, so I don't even realize it's there. And then I'll go back and look and I'm like, Oh, wow, I have that much in there. And then you can use it as a vacation or use it to pay your taxes.

So it's really utilizing, you know, what's there for you. It's on your phone. We're always on our phone. There's so many things you can use that right there on your phone, even to figure out your taxes, even if what we're saying doesn't make sense and get on your phone and just look up, you know, W-2s, W-9s and see the difference. And there's just, it's so important. People get so caught up in the making the money in the finances without considering how to take care of those finances. Well, it's not about what you make, but about what you keep that matters most. Hold onto your wallets, boys and girls.

Money Rehab will be right back. Now for some more Money Rehab. Have you found a system for keeping track of all of your paperwork and expenses so that you're organized comes tax time? Absolutely. I use an app. money rehab have you found a system for keeping track of all of your paperwork and expenses so that you're organized comes tax time absolutely i use an app i use uh quickbooks it's amazing i just swipe left or right on it if it's an expensive for exactly for your tax expenses but more and more important for your money yes finding a man. Right, right.

Money is the perfect partner. I don't care what anybody says. Yeah, and I'm really old school. I can't show you. I have it next to me. I have a little pindaflex. I put all my receipts in it. What? Yeah, I know. What is that? No, what is it? A pindaflex? What is that? Oh my god. Okay. Is that like a trapper

keeper? Or a roller? What? Y'all are making me sound real old right now. But this is my PendaFlex. I didn't know that was what it was called. Neither did I. It's like a portable filing cabinet.

Yeah. I call it a PendaFlex, and it may not be the right thing to be calling it. I think there's a brand that's called Pindaflex or something like that. Oh, maybe. Okay. So yeah, it's a portable little file thing. But to me, it just, I'm old school. So if you don't like doing apps, cause some people don't, I do.

I'm half and half, half app, half paper. Yeah. So yeah, I keep all my receipts in there. I go through them like again, once a month, every once, every two months. And sometimes I get real lazy and it's like every, you know, but they're there, they're there, they're organized and I have them all organized. So when I'm taking them out of my wallet, I know where to place them. And so, you know, you don't necessarily have to be all tech savvy to keep yourself organized. You just find what works for you. Yeah, that works for me.

Like doing the paper. And so do you, how do you invoice? Oh, I have an app to do that because I'll do it right when I'm on set. I'm like, okay, who do I send this to? What am I doing? And it's called Tiny Invoices. And I've used that for so long. Again, I'm a creature of habit.

So Tanika told me about, you know, well, why don't you just do it? Why don't you do QuickBooks? And I'm like, okay, yeah, I'll download it. And then I'm like, this, I already have this set up. So I'm just going to use this. So yeah, I just do tiny invoices. And again, like it'll tell me when something's 30 days past due and then I'll send a reminder. Yeah. Using an app for invoicing is key because that'll keep track of, it gives me notifications when someone's past due. So then I can send them a notification like, hey, this hasn't been paid. And it just keeps track of all your money and making sure that you're charging everyone the way you're supposed to be charging and invoicing and getting paid.

T, it's taken you a minute to come up with your pricing. How has that changed? Gosh. I feel like I change my prices probably every six months. And the reason for that is life tax. If I'm being completely transparent, life tax. Things change a lot within six months, especially to a year. I went from paying $40 to fill up my tank to 70 now.

Exactly. So I had to increase my prices when inflation went up. I just had to. There's no, yeah, especially even after the pandemic, I had to make some adjustments because, uh, that, that is actually what made me realize like, Oh, like I don't have my own personal unemployment insurance. You know, I don't have that. So, uh, I have to change my prices so that I can have that little cushion in that savings for when, if some, for some reason I can't work, I have that there for me that, that, uh, reserve there. So do you have

insurance? Yeah, I do. I have life insurance. I have, um, basically it's my own form of unemployment insurance now. It's, uh, just, oh my gosh, I forgot what the term is for it, but, um, I do have an insurance for if like, I need to pause working, like say I, you know, um, spring, God forbid, knock on wood, spring my ankle or something like that. And I have to take some time off. I can take that time off. Uh, I pay a deductible on it and then it just like supplements my income while I can't work. So yeah. And my prices, prices reflect that because I, again, during the pandemic is when I, it all dawned on me like, Oh, there are a lot of reasons why I would not be able to work. And how have I been doing this for so long without charging accordingly?

For today's tip, you can take straight to the bank. If you're a freelancer, you may want to look into establishing an entity for your business like an LLC. Having an LLC can help you keep all of these deductions streamlined, and it gives you some protection in case you get into a legal pickle. An easy place to start looking into the process is LegalZoom, and no, they do not pay me. It's just a good resource for understanding the steps required to make your business official. Money Rehab is a production of iHeartRadio. I'm your host, Nicole Lappin. Our producers are Morgan Lavoie and Mike Coscarelli. Executive producers are Nikki Etor and Will Pearson. Our mascots are Penny and Mimsy.

Huge thanks to OG Money Rehab team Michelle Lanz for her development work, Catherine Law for her production and writing magic, and Brandon Dickert for his editing, engineering, and sound design. And as always, thanks to you for finally investing in yourself so that you can get it together and get it all.