Finance Mini-Series: The Smart Creator’s Guide to Taxes with Nate Coughran

Disclaimer: This transcript was generated using AI.

Ann Morrissey: Hey there, Ann from the Food Blogger Pro team here — you’re listening to the Food Blogger Pro podcast. This is the second episode of our finance miniseries, and today Bjork is sitting down with Nate Coughran from Cookie Finance. Nate and Bjork will kick things off by talking about how setting up an LLC can protect your personal assets and reduce audit risk and how keeping separate bank accounts for your business makes tracking your money way easier and less stressful. When it comes to taxes, creators can claim unique deductions, but it’s important to find the right balance. Nate emphasizes staying on top of your bookkeeping throughout the year to avoid end-of-year stress. And if you’re making over $75k a year, you may want to consider hiring a professional to ensure your tax strategy is solid and you’re setting aside enough for taxes. It’s all about staying ahead and keeping things simple. We hope you’ve enjoyed this finance miniseries and that it’s helped you refine your tax strategy as we head into tax season. And now without further ado, I’ll let Bjork take it away.

Bjork Ostrom: Nate, welcome to the podcast.

Nate Coughran: Thank you. I appreciate you having me on.

Bjork Ostrom: We’re going to be geeking out on one of my favorite topics. Now, Lindsay, my wife, Lindsay often rolls her eyes whenever I connect with somebody and if it all gets into the realm of taxes, bookkeeping, most people would be like, I’m done. I’m out. But for me it’s like now we’ve finally gotten to the thing that I enjoy talking about and that’s the world that you live in. It’s your day in and day out. But one of the great things about this conversation is not only do you have an expertise in, one of the things that I would make the case for is one of the most important elements of running a business is the books, the accounting, the numbers, kind of your dashboard, but you have a specialty within the creator world, which is a unique world to operate in because it’s not like a business like the sandwich shop in the building that we are here. It’s not like a business, like a widget factory. It’s a very different type of business. So how did you get into the world of creator businesses and doing the accounting and bookkeeping for those businesses?

Nate Coughran: I started my career working for one of the large accounting firms, spent the rest of my career working in finance and accounting, but really the idea behind Cookie Finance started a few years ago. I have two sister-in-laws who are content creators on Instagram and while on vacation they were lamenting about just how old school their local CPAs were, didn’t understand them at all, giving them not great advice. When I did my own research on TikTok, I was like, oh my gosh, there’s so much fraudulent advice out there on TikTok and just poor advice, and I didn’t see a good unified voice of here is a CPA, an accountant who understands creators, understands that blurred wine because with creators it’s just this blurred wine of business and personal and navigating around that.

Bjork Ostrom: Well, you think of even if you have a lifestyle blog, how messy that can be because it’s like what’s business and what’s just my life? And my guess is there’s some decisions you need to make where it’s maybe not clear and you have expertise in that. So curious on the two sides. One is the old school CPA who comes from very traditional and the other is the extreme of a TikTok influencer who has these opinions on how to do this accounting hack. Do you have an example or two from each end of the spectrum that you saw as advice that wasn’t great?

Nate Coughran: Yeah, both of these are now clients. One, she does a lot of affiliate marketing through Amazon, does clothing, that type of stuff, fashion, and her last CPA said, Hey, you can’t write off any of the clothing you’re buying because it’s personal use. She made $300,000 from affiliate links through Amazon through her fashion, and when she came to us, she said, here’s my tax return from last year. My CPA said I had $5,000 worth of write-offs. I’m like, what are you talking about? You make 300,000 from Amazon. I can guarantee you spent way more than 5,000 on clothing. No, she said, I couldn’t because it’s personal, whatever. We ended up finding tens of thousands of dollars worth of deductions that were rightly owed to her, got her back $14,000 in taxes that she overpaid in because her prior accountant refused to give her some of those, I don’t even want to call ’em personal. They really are business. The business would not exist.

Bjork Ostrom: She couldn’t have done it if she didn’t have the clothes or the pieces that she was reviewing and talking about. Sure.

Nate Coughran: Yeah. The other extreme, one of our clients on TikTok that he’s a younger one. Basically, if he went out and bought a brand new Porsche, he could just write it off a hundred percent as a marketing expense. So long as he put his logo on the side of the Porsche, it’d be a hundred percent marketing expense and fully deductible. So I had to walk him through that. That’s not exactly how it works in the world of accounting. He’s like, no, but this guy, he buys all these supercars all the time and he says it’s a hundred percent deductible. I’m like, yeah, and he’s also going to get audited and have a lot of penalties and everything else. We are really here. We try to be, we’re very much in the creator space. We only work with creators, so we’re very in tune with what’s standard, what’s normal. We have creators across every platform, every niche possible making 60,000 a year to millions a year. So we really lean on that experience to help our clients navigate those deductions.

Bjork Ostrom: Yeah, can you help people understand, I think when you are on the outside, when you’re just starting, you think, Hey, there’s these hard and fast rules. There’s these things that I need to understand and here’s where the line is and this person said this, so it’s really that’s how it is. But one of the things that I’ve started to learn is it’s almost like there are certain things that have to be interpreted. Can you talk about on your end how you go through the process of feeling confident, making a recommendation, and even the idea of taxed law and cases that go, it’s like the IRS versus somebody else, and how those inform certain decisions to get you to a point where you feel confident saying, Hey, we can point to this. Here’s the outcome of this case, so now we know, or here’s the documentation within the IRS code that tells us this is how we can treat this. What does that look like and how do you make decisions to allow you to feel confident in the case for fashion or in our world with food, if you buy a bunch of food for recipes, how do you feel confident knowing if you can deduct that or not? As it relates to IRS and the kind of ambiguous, it kind of feels like these people who might show up at your door with a suit like in matrix and chase you down, how do you make sense of that and feel confident making the recommendations?

Nate Coughran: Yeah, so the first thing I would just tell is that the tax code is actually very ambiguous. The last real true major overhaul to the tax code within 1986, arguably the best year, the year I was born is in 1986 that has the last major overhaul to the tax code, and they intentionally have to make the tax code fairly ambiguous. It has to apply to millions of businesses across industries and niches. And so a lot of it is truly up to interpretation, which can be really frustrating for someone that’s not comfortable in the world of taxes. But pretty much every business kind of rule is if you feel there’s a greater than 50% chance that if you were audited that you would win an argument. Almost every CPA would recommend you take it because a lot of it is up interpretation. I sad, but it’s reality. It’s also up to the interpretation of the IRS agent who is auditing. You can get two cases. It could be an individual, which is frustrating. So there’s actually not a ton of law cases you were talking about. One that doesn’t really apply here, it applies to some of our clients though, like certain plastic surgery, there’s case a lot around it of you cannot detect certain types of plastic surgery and it’s gone through the courts and everything else, but most of it’s a lot opportunity. So one thing I’ll share real quick, the framework we use, yeah, that’d be great for really all creators to use when they’re thinking about is business personal is if you think about your phone, we’ll say Apple or Google, they had to spend hundreds of millions of dollars developing the phone, all the research development, packaging, the advertising, all of it. They spent hundreds of millions of dollars to develop that new phone. They then mark up and then sell to you for a profit, well creators, and that’s called the cost of goods sold. All those expenses are called the cost of good sold. So people can, anyone’s like, Hey, what are your cogs? You’re like, oh, I know what that is.

Bjork Ostrom: And literally to break that down, it’s like what is the cost of the thing that you are selling? And so for Apple, the cost is all of the material parts, but also the time of the team members that maybe are building the software, but of this analogy maybe just easiest to say like, Hey, the parts of the phone.

Nate Coughran: Yep, that’s exactly right. And so for creators, what creators are selling, they’re selling their brand, their reputation, the trust, their views. That’s what they’re selling when there’s a brand partnership and a brand’s willing to pay you $10,000 to have a post or whatever, they’re buying what you have with your community. And so that’s what you’re selling. You’re selling your brands, your community, that trust, that you’ve shared with your community. And so any of those costs that you spend to build content, to build that brand, to build that trust, to build that engagement, all of those things are deductible. So if you’re a food creator, you need to spend money on kitchen supplies, on nice pots and pans and things like that. I would never be, if any of the food creators use my pots and pans, they would be zero trust. Really that’s using,

Bjork Ostrom: It’s a pancake with a little Teflon on it,

Nate Coughran: Back splashes. You need to make sure you have a nice backsplash. All those things that are helping you build that content and all of that, those are how you should think about what should be deductible for the business.

Bjork Ostrom: Yeah, that makes sense. In our case, speaking personally, it’s a little bit easier because we have an actual office that we come to and we have an actual kitchen studio, and so the line is pretty clear if we are having something shipped to the office or the kitchen studio, it’s like, man, that’s really easy to classify that as a business expense is if we have something that’s going to our home kitchen, it feels a little bit harder. What about for people who are just in a home kitchen, you are ordering a new set of pots and pans. When I think of that from a computer standpoint, I’m like, oh, you’re ordering a new computer that’s a business expense, pots and pans. It feels like, well, I don’t know, you’re maybe using it like 50–50 for home and then for business. So in a case like that, how do you make a decision as a creator? And I know we could go through the whole podcast, could be like, okay, how about when you get your nails done for a video? How about that one? That’s not the point here. It’s just maybe helping people understand conceptually how to make that. What is the framework for making the decision on is this deductible or not?

Nate Coughran: Yeah, I would say just a very quick framework to use would be would I just go out and buy this on my own if I were not making content? So would you go out and buy new pots and pans just on your own, or are you buying it because you want upgrade the look, the aesthetic, the quality, whatever it might be of your pots and pans that you’re using for your shoots? And if that’s the intent, then it’s a business expense. It might feel weird because you’re saying back to my fashion creator, it feels weird. Well, I also use these clothes on day to day, but identify those clothes. I couldn’t make the content that then makes me money. So it is the intent that this is used for business. If so, then it’s a hundred percent business, even if part of it is used for personal.

Bjork Ostrom: And I almost imagine taking the stand, not that you would do that, I’ve never even met anybody who had to do that, but could I go in front of a jury and my grandma and say, here’s why I made this business expense and feel confident in doing that. It almost for me, that helps me kind of think through, do I feel comfortable declaring this as a business expense? What about on the risk side of it? In making that decision, I think it’s helpful for people to understand what does that mean if you get audited, number one, the risk is something is flagged in your return and then you’re audited. Even within that though, I think part of what’s scary is the ambiguity of what does that even mean and what is the risk within it? And I think people might feel more comfortable taking some of those deductions if they understand what the risk inherent is in saying, I think this is a business expense or not a business expense.

Nate Coughran: Yeah, that’s a really great question actually. So lemme talk about audits in general, less than 1% of all tax returns are actually audited, and that’s a statistic that the IRS publishes and they actually break it down by income category. The more you make, the higher your audit risk is, but for most creators it’s 1% or less chance of getting audited. So that right there, it is a very helpful to know, very low chance that you’ll get audited. Now within that, most of those people who are getting audited, it’s because they have really big red flags. So a couple of big red flags would be auto deducting your car,

Bjork Ostrom: Like the Porsche example and not mileage to be clear, it’s like you bought a car and you’re deducting the car.

Nate Coughran: Yeah, no, that can be deductible. I’m not saying you can’t because a lot of our creators do, but it’s being smart about, it’s saying, yeah, I bought this new car, but only 50% of it’s actually legitimately business. The rest is personal. And it probably becomes easier if you have a catering business versus just at home as a creator if you have a need to move things back and forth and equipment or deliveries, things like that. Yeah. And if you have let’s say a hundred thousand dollars of income in 200,000 of expenses when there’s these really big weird things. But for the most part, last year we did hundreds of tax returns for our creators. None of them were audited And as long as you kind of stick that framework I talked about. But just to answer the other part of the question of what does it mean to get audited, just so people kind of understand that. So less than 1% actually do. The 1% who do get audited is usually some pretty big red flags in there, but most audits, the IRS will send you a letter and they’ll say, Hey, on your tax return you have a line item where you had $50,000 for contract labor. Can you just send a support to back up that 50,000? Usually it’s only one or two line items that they’ll call out. They don’t want every single receipt, they just want high level the big receipts and some explanations of what it was. We’ve had a couple of clients where that happened. They send a little bit of support, a quick letter to the IRS and the IRS is like, cool, we’re done. I don’t know the statistic, but it is so incredibly rare that the IRS actually goes in, opens up the can and is digging into every single expense. You need a receipt for every little thing. Where’s the receipt for this Chick-fil-A? That is so incredibly rare. The IRS is much more focused on people making tens of millions and billions of dollars. That’s who they’re focused on, not people at the lower end of that are like, did you take these Chick-fil-A fries home and feed them to your kids because we’re going to add a percentage back?

Bjork Ostrom: I didn’t even know that. I didn’t know that about the potential of even a phase one where they would say, can you give us a little information about this specifically? When I heard my vision of it was always, it just goes from zero to 100 and 100 is we’re going to dive deep and look at every line item within your business. So it’s helpful to know even that information to know that’s the most common scenario. And then in a very rare location, they would double click into all of it and open up and look line by line. So point being, it’s helpful for us to know as creators what we’re dealing with, and the intent isn’t to be, the intent is to thread the needle with being aggressive but not overly aggressive. Aggressive in the sense that you are taking the deductions you deserve within your business, but not overly aggressive where you get into considering taking things as business expenses that aren’t actually business expenses. Does that more or less define their filter?

Nate Coughran: Yeah, that’s exactly right. It helps no one but the IRS to be too conservative. One of our clients, he made well over $500,000. He was a video game YouTuber and he was so scared to take any deductions in the end, the only one take $3,000 worth of deductions on, call it half a million dollars of income.

Bjork Ostrom: Wow.

Nate Coughran: And I’ll call him John. I’m like, John, you’re simply known to the IRS. The IRS is going to be like, sweet. That’s a lot of extra income. And there were so many things that we wrote out that were very legitimate, but he just was so scared to get a game console

Bjork Ostrom: TV, mic.

Nate Coughran: Exactly.

Bjork Ostrom: Subscriptions

Nate Coughran: So anyway, so definitely don’t be so aggressive that you write up every penny of your income. Don’t be so conservative that you take nothing.

Bjork Ostrom: Well, and you probably deal with people on both sides where you have to have the conversation with somebody who’s being too aggressive. You kind of alluded to that and somebody who’s not being aggressive enough and finding that middle ground, which is what you’re so good at and why people should work with professionals like yourself because you’ve seen a hundred different returns thousands over the years and you’ve developed good insight into where the best middle ground is. And so often that’s one of the many advantages we get with working with somebody who has multiple touchpoint, but not only multiple touchpoints with multiple clients. In your case, it’s multiple touch points with multiple clients who are all in the creator space, which is one of the great things and why it’s so fun to talk to you. So switching subjects, I’m going to talk about a few years ago when I went to the dentist, and I’ll bring it full circle here. So I went to the dentist, I had a cavity, I went in to get it filled and I was like, never again. It was so miserable and I’ve had cavities before that have been filled, but just in this moment that was the breaking point for me. And so I was like, what do I need to do to never have to get a cavity filled again? And granted, I probably will at some point, but this was my plan of action. I was like, okay, I’m going to take the little floss tooth, pick things, pick floss things, I’m going to put ’em in my car. And that way when I get in the car, it is going to be easier to just have that as a routine and something that I do and I’m going to have a nightly routine that I go through every night. I’m going to go flush, I’m going to brush, I’m going to gargle with Listerine, I’m going to do all of those things. And I really locked in my system and the next time I went, I didn’t have a cavity. It was a great outcome and it felt really good. A very similar thing happened with my end of the year taxes, and my guess is there a lot of people that are listening to this can relate where we came to the end of the year and it was like, I don’t know, this was years ago, eight, nine years ago, and it was so incredibly frustrating. I hadn’t sent out, it was the first time that we had to send out 10 90 nines and I didn’t really know what that was. So it was sending out last minute, 10 90 nines. It was getting last minute information on expenses and revenue and deductions. And it was so frustrating that I had this moment where I was like, never again am I going to come to the end of the year and feel stressed and rushed. And what I attempted to do, and I’ve been iterating on this ever since, is to set up a system that allows me to get to the end of the year when we have to submit our taxes and we always file for an extension, which maybe we can talk about,

Bjork Ostrom: To get to that point and to never have to feel stressed or frustrated or this is the worst thing ever. And the biggest thing that I learned from that was I need to be spreading this out throughout the year. And so when there’s a little bit of an increase in pressure when we’re coming up to the time to submit our taxes at the end of the year in October in our case, but not anything like what it was, and my guess is there’s people who are listening who are like, I can relate to that. Can you talk us through, for somebody who is experiencing that feeling, how do you go from, this is stressful, this is the worst part of the job. I don’t want to be involved with this to, I feel like not only am I not stressed, but this is something that’s actually additive to my business and a helpful thing. Now, what are the major structures and component parts that we need to build as creator businesses to have that feeling as it relates to our taxes and our bookkeeping?

Nate Coughran: Yeah, great question. And that’s what we see every day of people stress. One of our newer clients who signed up two weeks ago when I was talking to her on the phone, she was like, I actually stopped making content at the end of this year because I was so scared of how much money I was going to owe in taxes and not knowing what was going on. I just stopped making content because I didn’t want to have to deal with it. And I’m like, Oh man, that’s not good. And so I totally get that. There’s a few things that we tell freighters regardless of how much you’re making, whether you’re just starting out in your journey or you’re established and you’ve been doing this for years, there’s a few things that you should do and put in place that really sets you up nicely for the end of the year. The first one, this doesn’t have to necessarily do with income expenses, but get an LLC, please set up an LLC. Most states it’s between 150, $250 per year for the LLC. It’s going to protect you, your personal assets, it legitimizes your business, it actually lowers your audit risk. When it comes to the IRS, it’s just good practice to get. We can talk about that later if we have time, but I’ll put that to the side, but that’s always the first things we say. Get that LLC set up. It’s really easy to do. Now in terms of the finances piece of it, the very first thing get a separate bank account, whether it’s just if you’re at Chase and you open up just another personal chase checking account or whatever you want to do. It doesn’t have to be a business bank account. It can just be like another personal checking account. Get a separate checking account, have all of your income funnel into that checking account. If you use credit cards, have a credit card that’s dedicated to the business. If you have three credit cards already, you just say, Hey, this particular Visa, we’re only going to use business expenses on this one, right? It’s separating out the business and personal. Now it goes back to understanding what is and isn’t deductible. That’s kind of what we were talking about earlier, but if you can have a separate bank account, all of your income for your creator business is going into that one account, all of your expenses are going out of that account or from a credit card that’s dedicated. Then once you get to the end of the year, it’s a lot less daunting because probably what you experienced, everything was probably mixed if I had to guess. And then you had to go through thousands of transactions that were personal and business all mixed together and you’re like, wait, was this Amazon purchase? Was this, I don’t remember. If it’s a business purchase, then you’re digging through your Amazon account of like, oh yeah, I need to pull this one out. What about this? And you’re going to miss deductions. You’re going to spend days and days and days going through thousands of transactions, try to separate them all. Where if you have that dedicated account and you’re really diligent about using it just for business purposes, when you get to the end of the year, then everything’s there together. If you are working on a CPA, it’s easy enough to be like, here’s all my bank statements now. Go make it nice and pretty in Excel. For me, that’s level one. The next one would be,

Bjork Ostrom: And real quick on that, do you have a favorite bank? So one of the things that we just recently did is I’ll tell people as we talk through, because I think it’s interesting to hear what we do. We have a Wells Fargo bank for a parent company, which is tiny bit, but then all of the operating companies we have use Mercury, which is more of an online focus bank. I dunno if you’re familiar. My guess is you’ve seen a lot of ’em. We’ve really loved that as a solution. We’re mostly online with what we’re doing, and so it’s great. There’s some things that are downside, like you can’t go into a bank location, but generally we’ve really liked Mercury and then we also use Wells Fargo personally and then for our parent company TinyBit. So that’s been great solution for us. Do you have other banks that you have noticed as great banks to work with or maybe even business bank accounts that have been good?

Nate Coughran: Yeah, absolutely. So, the big ones for us, Chase is probably the number one recommended. They are probably the best business banking solution in personal bank. They’re great Wells Fargo and Capital One. Why we love those, they’re really easy, like the online portal, everything is really easy to get all your information. There’s branches all over the place. They’re big, they’re well established. There was a banking crisis a couple years ago. It kind of exposed

Bjork Ostrom: Silicon Valley Bank. Yeah, it was like a literal run on the bank. It’s a wonderful life.

Nate Coughran: That was pretty crazy, and that’s why we really recommend clients go to those. They’re well established. We’ve had hundreds of clients use them. Mercury is also a really great one. If you want pure online only, those are the four we recommend. Actually, it’s Chase, Wells, Fargo, Capital One, or Mercury. Mercury, if you want just online only.

Bjork Ostrom: Mercury, being one that’s newer, doesn’t have the deep roots that a chase would, as an example. Yeah.

Nate Coughran: Yep, exactly. The ones that we really encourage you to stay away from would be like a local credit union. I know it’s great to support your local community and it kills me to say, don’t do that. We’ve had just a lot of clients who use kind of local or smaller credit unions or banks have a really hard time connecting those banks to different applications like QuickBooks or Xero or something like that, getting payments from different platforms. They’ve sometimes been flagged as fraudulent just because they’re smaller banks, they’re not.

Bjork Ostrom: It’s the systems aren’t as established and connectability.

Nate Coughran: Yeah, that’s usually what we say stay away from. We kind of like those bigger banks or Mercury. Those would be our recommendations.

Bjork Ostrom: Sure, that makes sense. And there’s probably one of the things I’ve come to learn over the last decade of doing business is banks have, there’s different specialties that they have, and you might find that you could have a small account at a credit union, not really actively using it, but maybe you go there for a loan or there’s different banks have different specialties and so options there, but it makes sense for what we do, which is online based business, a lot of transactions that are happening online, the need to connect things with a QuickBooks account or Xero, the importance of that connectability means that you probably are going to have a company that’s a little bit more established and have those systems in place. So we have the LLC, the limited liability company setting that up to protect yourself, but then also it allows you to get an EIN, which is kind of like a business social security number. You go out, you set up a separate bank account, doesn’t have to necessarily be a business bank account, but my guess is that would be ideal.

Nate Coughran: That’s right,

Bjork Ostrom: So you have this separate bank account. Let’s say it’s at Chase, and then what you do is you start to run all of your transactions that are business related through that using the filter of, Hey, is this something that I’m buying because of the business? Yes. Okay, let me grab, I have my wallet right here. I won’t expose any of the credit card information, but my top card is a personal credit card. My second card is my business card, and what I find is my little system here is I keep my personal card when I’m just at home moving around. If I go on a business trip, I flip these, so suddenly my business card is the front one, but just earlier today went out for a business related lunch, use a business card. So then I travel, I’m going to be using the business card in one password. We have our business card saved, and in Amazon we have a business card and we have a personal card. So you start to run those separately. You start to get a system around that. My guess is that gets you quite a bit in terms of for you on your end as the person who then receives the information to be able to sort through it. But let’s keep going. Let’s say you want to continue to have things be really tight. You’ve made those changes, you are running things really clean through the separate bank accounts. What do you do to continue to level up along the way?

Nate Coughran: Yeah, so I’ll show two options. The first one is DIY. I would say if you’re going to try to do it yourself, don’t sign up for a QuickBooks type of platform. Why I say that is those platforms are great. We personally use QuickBooks for all of our clients, but if you’ve never done bookkeeping, you’re not familiar with accounting, it’s really easy to get it set up, connect your accounts, and then mess things up. We’ve had just countless clients who try to do zero on their own or QuickBooks on their own. They double count income. One client overstated their income by tens of thousands of dollars. Perfect.

Bjork Ostrom: It’s like the opposite of write off. It’s a write on. Yeah.

Nate Coughran: Yeah. Because X was classifying their credit card payments as income rather than an actual payment. So it was really easy to kind of mess it up. If you are going to do it yourself, we recommend just having a simple income and expense tracker. You just lay out your income and ideally once a month you go through that bank, your bank account, you pull out all the income, you list out the date, the sorts and the amount and a couple columns over for the expenses, the date, the description, and the amount. And each month you just kind of go through and put those in. That will make taxes a breeze at the end of the year. Right? That’s if you’re going to do it yourself, just use a Google sheet or an Excel spreadsheet and just do it that way. It doesn’t honestly make sense to set up QuickBooks or zero almost guarantee you’ll abandon it after a month and then you’ll forget about the subscription and then you’re just paying for nothing.

Bjork Ostrom: And the idea is basically that’s what you’re trying to do within QuickBooks anyways, which is create a list of expenses, a list of the income, and figure out at the end of that month how much did you make or lose, and then at the end of the year, how much did you make or lose?

Nate Coughran: Yeah, exactly. So we typically tell people, if you’re making less than 60, $70,000 a year from your content creation, just try to do it yourself, right? To your point LLC, the bank account, keep a clean separation and just try to do it on your own to save yourself some money. As you’re building your business, you want to spend your money on reinvesting in the business and growing and not necessarily on a service like Cookie or someone else, but where it starts to actually benefit you to work with a professional is once you’re past $75,000 a year or you’re on track to do that in a 12 month period to work with a professional who can one, keep track of all that income expenses for you two, be an advisor to you like a sounding board of, Hey, based on where you’re at right now, we see that you’re not deducting this. You haven’t been deducting your internet, your cell phone. What about you haven’t thought about a contribution to a retirement account that could lower your taxes or becoming an S corp, which we can talk about later. There’s just a bunch of different things you want to free up your time at that point to spend time on the content and not in the weeds trying to classify things. That’s where it can become a net positive, right? If your accountant can find more deductions for you, take time off your or give you more time and be able to find ways to be more efficient with your tax structure. But those are kind of the two ways of the next level to go to. Yep.

Bjork Ostrom: That’s great. Before we continue, let’s take a moment to hear from our sponsors. We know that developing testing and publishing a blog around food can get costly, which is where Cookie Finance comes in. Did you know you can write off ingredients like flour, butter and chocolate chips that you’re using to produce content? Cookie Finance specializes in helping content creators like you maximize tax savings while handling all your bookkeeping, quarterly tax payments and personal and business tax returns. Plus they’ll help you uncover deductions you might be overlooking, whether it’s kitchen tools, camera equipment, ingredients, or even your food blogger pro membership. So you never miss out on savings month to month plans with no long-term commitments. Cookie Finance makes managing your taxes and finances simple so that you can focus on what matters most, creating amazing content ready to start saving. Book a free consultation with Cookie Finance today by going to cookiefinance.co and clicking on the Book an Intro Call button. And that was kind of where I ended up when I went through that semi crisis of like never again. What I realized is we need to bring somebody in who I think of this concept of super router as we scale up what we are doing and try to do more, there needs to be more super routing that we do. Something comes in, we don’t try and figure it out. Accounting question comes in, I’m not pausing what I’m doing and spending 90 minutes trying to figure out the accounting. I reach out now we have a fractional CFO, I reach out to them or bookkeeper like Cookie Finance as an example for anybody listening, reach out to them and say, Hey, I’m trying to figure this out. Can you help me? It’s bringing in that expert and you become a router. You’re still getting it done in the sense that the task will be accomplished, but it’s you doing less of it. In order to do more of what you specialize in, you have to bridge that gap in order to justify the expense. To your point, 60,000, 70,000, 80,000, you’re starting to get to that point where maybe you can start to allocate some of this while still having a salary and routing that to the experts. So I love that idea. And the big unlock for us at that time was going from trying to figure out everything. At the end of the year even, we did have separate bank accounts, personal and business, but it was trying to figure it out all at the end of the year, two every month along the way saying, Hey, what did January look like? Let’s review the categorization of these expenses. Let’s make sure that this is accurate. Okay, great. Is January good? Let’s close that up. Then we go on to the next month. And what happened was, and I was thinking about this, it started to develop into, we now have a dashboard, and I was thinking about this idea, if you have a car and you’re sold a car and it didn’t have a dashboard on it, you can’t see how fast you’re going, what the RPM is. You could still drive it, but you’d be at risk. And I think there’s a very similar analogy that can be drawn to running a business where your dashboard is, and it is your books, it’s the numbers, it’s the revenue, it’s the expenses, it’s what’s happening on a month to month basis. You can run your business without that, but there’s a lot of risk that’s inherent in that process. And so to the degree that we can develop this dashboard alongside somebody who has expertise in doing that, I think what happens is you start to understand the mechanics of your business more. Hey, actually why am I paying more in software now than I did last year? And at this point I’ve started developing, even just today, I did this and I’d be interested in you seeing if you have any ideas for adding to this developed a little system where we get the books now every month, and one of the things I’m doing is comparing this month to last month within QuickBooks, and then I’ll go and I’ll compare this month to this month last year, so I can see how did that change from last year? And then I’ll compare the last year to the last year before that. And so you can start to see, okay, they called the trailing 12 months, so if this is January, it’d be January, December of 24 compared to January, December of 23. And what you’re doing is you’re starting to understand how your business is moving and what impact it has, and also seeing similar to the dashboard on the car, wait, the red light is on. Why is that light on? I need to get that addressed. So let’s say somebody goes through these processes, they establish the LLC, they separate their bank accounts, they start to split out expenses in a really good way. They get to the point where they’re either DIYing it or let’s say they’ve gotten to the point where they can justify it. They work with Cookie, they do those, the bookkeeping of their expenses, and they have a good understanding each month. Once you start to get that information as a business owner, how do you then start to use it proactively? I think that’s where it gets really exciting.

Nate Coughran: Yeah. I’ll use two recent examples because I really like these and it probably makes sense for anyone listening. The first one was one of our creators on Instagram, and she, last year she did about 350,000. And her question to me was, I’m completely maxed out. I’m thinking about hiring a virtual assistant, but I just don’t think it makes sense and I’ll call her Sarah for generic reasons. And I was like, alright, Sarah, you made 350,000 with all your other expenses we’re going to take out, not include wages. You spent $50,000, so $300,000 net, how much would you pay this virtual assistant? It was like $20 an hour for 20 hours a week, whatever. We went through all the math, you kind of wind it up against your other expenses. I’m like, okay, but how much more time, if you had 20 extra hours each week to produce content, how much more money could you be making? It’s like, oh, well, I could probably easily make another 50,000. I’m like, okay, so you’re going to pay virtual assistant, call it 15, 20,000, but you can make an extra 50, 60,000. It’s like, oh, oh, right, right. Okay. That starts to make sense and the business can actually support it and you can see, and you’re not shooting the dark. That example of a dashboard, it’s not like, well, I don’t know if the business can support it, are redlining right now with the RPMs. Another good example is one of our creators, she, she’s really active with ads on Instagram. She’s a home decor before coming on board, it is all DIY. Had no dashboard, had no idea what was going on. And before she signed up, her very first question was, I’m running all these ads, but does it actually make sense to running all of these ads? And first we had to get in QuickBooks, we had to clean up all of her financials, get all the information, but then once we had the information, I’ll call her Jane. It’s like, Jane, for every dollar you spent on advertising, you increase revenue by $3.

Bjork Ostrom: Yeah, do that all day long.

Nate Coughran: Yeah. Where suddenly with that framework, she supercharged her ad spend and she went from doing 3 5400 in revenue last year or the year before. In this last year, she’ll do over a million. With that understanding of confidence.

Nate Coughran: That is a good decision. So much just this gut feel of it feels like it helps, but now you actually have the numbers and dashboard to back it up.

Bjork Ostrom: That’s great. Yeah, and I think that’s a perfect example of once you have that information, you can make a confident decision whether it be on, Hey, I’m going to bring somebody in. I think that will either, and I think either a case could be made for either of these, this is going to increase my revenue or maybe it might not increase my revenue, it’ll just give me back a bunch of time. And I know that when I look, I have enough money to cover this and it’s worth it for me to spend this money to get 10 hours back so I can sustain myself as a creator and not burn out. Because that’s also important is that maybe it’s not that you are buying additional revenue, but you’re just buying peace of mind or headspace or lower stress. But all of that is aided by having that dashboard that you can look at. Do you recomme, what do you recommend in terms of frequency and even, I know this sounds so basic, but how do you do it? So somebody sends you, you’re working with Cookie Finance, they send, Hey, here’s what it looks like, and maybe you can talk about just the difference between accounting and bookkeeping real quick. Can you talk about that to separate the two of those and maybe how those interplay before we talk more about it?

Nate Coughran: For most intents and purposes for what we’re talking about, we’ll use accounting and bookkeeping interchangeably. It’s accounting, bookkeeping. It is making sure you’re categorizing all the income expenses and that you have a really good clear picture of your financial health. You get a profit and lot statement. You have a really good understanding of the numbers behind your business. So bookkeeping is just the process of on a monthly basis, going through categorizing all the income expenses, putting in the right categories, make sure you are capturing every deduction. That’s what bookkeeping’s role is. And then taxes that role is then to, on a quarterly basis, make sure you’re paying as much as you should be in quarterly taxes throughout the year. It’s learn that tax liability, tax planning, tax strategies, and that’s why where taxes come in, where bookkeeping wouldn’t. So it is a common question we get of should I hire a bookkeeper or a tax person? The first step is usually the tax person, but ideally it’s combined that way you’re not going to two different people, but a tax person typically won’t do the bookkeeping and bookkeepers won’t do the taxes. So ideally they’re combined into one place, you’re not going to multiple different places.

Bjork Ostrom: And idea being that really good books help inform the taxes. And so in our story, it was the tight bookkeeping that made taxes easier. But to your point, you’re always going to have to pay taxes, and so that will have to get figured out. But whether it’s DIY bookkeeping, like we talked about spreadsheet expenses and income, or at some point bringing somebody in who can do that, they say, okay, I see these transactions, I’m going to categorize them for you. That could be the bookkeeper accounting, it seems like almost would be then the next level above that, which could give you advice to say, Hey, have you considered this or this? Maybe you get some of that from bookkeeping as well, but a little bit more of the expertise around that. And then obviously taxes being kind of the event of paying those quarterly or yearly. So that makes sense. So going back to the question, let’s say you get January wraps up, you get books sent to you books. What do you do with that? How do you use that asset wisely as a business owner to help inform decisions to help learn? What would you advise people do with it?

Nate Coughran: Yeah, there’s a couple different levels. The first one is triage. Do you have enough money to actually pay your rent to cover those basic living expenses after all the expenses you spent on the business at the end of the month, how much is the leftover for you taking into consideration taxes? That’s something that we see time and time again. People don’t set aside money for taxes and they get to the end of the year and they get hit with the tax bills. It’s like, oh no, I don’t have the money. I spent all of this. So it is at the end of the month being like, okay, this is how much is left at the end of the month and you set aside X amount towards taxes and this is truly what I have to live on. It’s like the level one is those good clean financials help you make those decisions of, okay, I can cover my basic living expenses. And for a lot of creators at that basic level, it’s when am I making enough that I can quit my full-time job into this? That’s probably the first big thing that these financials help you understand is when does it make sense? I can quit my full-time job and this can cover it. If you’re shooting in the dark and it’s all mixed together, you have no sense. It’s like, I don’t know. You’re never going to be able to make that decision confidently without having, and we’ve helped many clients make that leap. We didn’t make it for them, but because they had the information, they felt confident leaving their full-time job, then it can start to go up from there of set aside money for retirement and actually taking that money and being able to invest it. It’s understanding how much is luck over what can you be doing with that money to now grow it? What can you do with that money to then grow the business? And that’s where we can give general advice, but a lot of times it’s creator, creator specific of, oh, actually I do have enough money to do this renovation to my kitchen, and I really do think that could help with X. Right?

Bjork Ostrom: Yeah.

Nate Coughran: So it’s once again, going back to having that confidence and ability to know of what can you spend money on, can’t you, where do you need to tighten things up? Where can you be a little bit looser? Where can you invest your money, whether it’s full investments or to your own company? And then it can go much, much deeper and cooler analytics from there. But those are the foundational ones that usually people start with.

Bjork Ostrom: Yeah, that’s great. And one of the things that gets really fun, we could do an entire additional podcast on this, is when you get to that point where we talk a lot about making the transition from having a full-time W2 contractor job, and if your desire is to transition into being a full-time creator, it’s not the desire for everybody, but if that is your desire, how do you feel confident doing that? What does that look like? And then let’s say you continue to grow and build. How can you be strategic and smart about the additional income? Let’s say you surpass the income that you need to survive day to day, then what do you do with that additional income that is the best use of it? And like you said, it might be a home kitchen remodel, but it also might be investing into a food brand that is adjacent to your business, and then you become an advocate of that business and it helps it grow and the value of that grows. And so there’s a lot of really fun opportunities there in addition to just all of the 401k, all of these options that you can have another podcast for that. But one of the things that I think is important to talk about that you touched on just briefly, we’ve talked about on the podcast before, but I always feel like it’s important to mention is this idea of, so we talked about LLC and then we also talked about an S corp. That’s kind of confusing because an LLC can also have an S election. But talk to us about how all of that plays together and at what point should you at least start to learn about it or at least reach out to your accountant or CPA to say, Hey, should I be thinking about having an S selection or having this be an S corp?

Nate Coughran: Yeah, great. So at the simplest level, everyone should become an LLC. There’s no downfalls being an LLC beyond the couple hundred bucks. You need to pay each year to maintain that with the state. But LLCs are great when you become an S corp, and I’ll tell you about what that means in a second. You’ll always remain an LLC, so it’s not do I be an LLC or an S corp, everyone becomes an LLC. And then with that LLC, you can then kind of add on the S corp on top of that. And the big benefit of being an S Corp is saving what’s called on self-employment taxes. So as just a sole proprietor, if you have nothing or you have an LLC, the biggest tax you pay is the self-employment tax. It’s 15.4% that’s on top of your federal taxes and state taxes. That’s the one that people are shocked with. They’re not prepared. I talked with a new client recently and she’s like, my last CPA did my taxes so wrong. It was like I put all my income in the online calculator, it said X, I got my tax return and it was like $15,000 more than what that calculator said. And it’s because she was freaking about the self-employment tax. It’s probably the first time you’re filing taxes, whether you’re making a little or a lot as a creator, that’s going to be the big shock is that self-employment tax. So the idea is, and what the self-employment tax is, it’s social security and Medicare. If you work a normal W2 job out of every paycheck, you have social security and Medicare being taken out of every paycheck. It’s 7.65% of everything you make. What most people don’t realize is that your employer is also paying 7.65% in social security Medicare for you as well. So you combine those together, it’s 15.3%. So when you are self-employed, like are as a creator, you are both the employee and the employer. So you’ve made both halves of social security, Medicare, and that’s where you get that 15.3%. So as just a normal sole proprietor or LLC, you owe that 15.3%. It’s a gut punch and a lot of people aren’t prepared for that one

Bjork Ostrom: And to draw out from the meaning, so it’s tax. So who employs you yourself. So I think it’s helpful for us to understand that. And even within your tax returns, my understanding is if you just have an LLC, you don’t have an S selection or you don’t have an LLC and you just report it as income, like sole proprietor income, you just have one tax return because you are employed by yourself, so you don’t need a separate tax return because it’s just you, but then you’re taxed more on it that 15.4%.

Nate Coughran: Yep, that’s exactly right on top of all the other taxes you owe. That’s exactly right. It’s a great way to explain it. And so without getting too much into details, the S-Corp election essentially allows you to avoid paying up to half of those self-employment taxes. So if you are earning gross before all your expenses, if you’re earning call it $125,000 a year, the S-Corp election could easily save you 10 to $12,000 by having that election. It’s a massive, massive tax savings, but it does come with additional kind of compliance. One thing is you do have to file a separate tax return. You don’t pay additional taxes. It’s just kind of like an informational return you have to do each year. So you have to file a separate tax return. You do need to set up a legitimate payroll. We typically recommend Gusto. You need to put yourself as a W2 employee. There’s different things you have to register with the IRS. There’s different things you have to do that you definitely should work with a professional at that point. And so typically we say once you’re making consistently above 10 to $12,000 a month, call it a hundred, $120,000 a year, or you’re on track to make that in a year, it makes sense to make that election flip over to an S corp and start the process. Because even if throughout the year you paid an accountant $4,000, whatever it might be, you’re going to save significantly more than that in taxes by having that election, getting all those benefits of it.

Bjork Ostrom: Yeah, it’s that transition from you were self-employed, you were employed by yourself, you have this additional self-employment tax. Two, you’re no longer self-employed, employed by this. You’re a different entity. It’s a business that’s who’s employing you now, which means you have to be getting a salary from that company. So they’re paying you a salary and you also have to do a return for it because that’s a separate thing. But what it does is we don’t have to go into the weeds of why, I don’t know, but another podcast, maybe a deep dive on the reason behind the S-Corp, but tax law is written such that you get to eliminate that self-employment tax if you have that S-Corp. And so at that point, I like that. I like the a hundred thousand mark or 10,000 if you look at it on a monthly basis, or if you look at it on a yearly basis, a hundred thousand or 120,000 as a really clean marker of when you would make that transition. And to your point, that’s when you’d really need to make sure that you’re working with somebody who gets it, who understands it, who’s a professional, and can help you move forward with it.

Nate Coughran: Really easy to mess it up totally.

Bjork Ostrom: Well, and with all of this, that’s my feeling is like the cost that you are paying, not only is freeing up your time, not only is it getting you expert advice, insight, additional information, but it’s also a security against making an error, which I feel like The more that you do it, the less prone you are to having that. You have those reps, you have that experience for somebody who’s doing it for the first time, it’s almost like a guarantee that you’ll have a hiccup somewhere along the way. So that’s actually a great transition, Nate, into talking about cookie finance, what you guys do and the way that you can partner with creators. Everybody who listens to this in some form or fashion, or a lot of people, I should say. I got a message from somebody in the management company that we work with for commercial real estate, and she’s like, I just started listening to the podcast. So I’ll say vast majority of people who listen to the podcast are creators. They have creator businesses, and Cookie Finance is such a great solution for these people. If they’re looking to level up what they’re doing with their bookkeeping, accounting, and taxes, that’s all stuff that you do. So if people are interested in exploring that, what’s best path for them to follow?

Nate Coughran: So our business really takes care of everything. We’re helping you form your LLC, we’re making an S-Corp collection for you. If it makes sense. We get your QuickBooks set up, we’re organizing your financials. Even if in 2025 and you’re like, oh man, I have all my stuff from 2024, we’re here to get everything organized for 2024. It gets you all caught up and cleaned up and organized. That’s what our team does, helping you with your quarterly taxes, tech planning strategy, all of that. So the best way on our website is just cookiefinance.co. annoyingly, .com was taken.

Bjork Ostrom: Love it. Probably makes it more memorable though. That’s the thing, because you’ll always mention it’s do co and then everybody’s like, okay, they’ll make a mental note of it.

Nate Coughran: Yeah, that’s right. So cookiefinance.co. If you reach out, schedule time, even if you’re like, Hey, I don’t know if it makes sense, we’re more than happy to do free consultation. You can poke a time directly on our website, pretty much same day, get in contact with a member of our team and we can consult with you, talk with you about does it make sense to become an scorp, talk to you about deductions, walk you through anything, and there’s no obligation you can do that, and we’d be happy to chat with you.

Bjork Ostrom: That’s awesome. It’s a huge advantage for creators to have somebody like Cookie Finance in their corner. And like I said, the more that you can focus on your expertise, your specialty as a creator, and become a router in ways in departments that you don’t want to spend a lot of time with, I think those are the ways that you win long-term is bringing those people into your team. So we’ll make sure to link to that cookiefinance.co in the show notes, and we’ll have to have you on again, Nate, to have a conversation. There’s a ton of opportunities here and I know people want to figure out how to do it well and also want to figure out how to not have to do it themselves, and you can help them with both of that. So thanks so much for coming on.

Nate Coughran: Yeah, thank you so much for having me.

Emily Walker: Hello, Emily here from the Food Blogger Pro team. I wanted to pop in today and thank you for tuning into this episode of the Food Blogger Pro podcast. We are so grateful for you for listening. Before we sign off, I wanted to talk a little bit about the Food Blogger Pro forum. In case you didn’t know how it works, if you are a Food Blogger Pro member, you get access to our amazing forum. It’s one of my favorite places on Food Blogger Pro. I spend a lot of time there myself. And on the forum, we have tons of different topics for you to explore. We have a Building Traffic section, a Photography section. We have an Essential Tools section. We chat about generating income and essential plugins, all sorts of areas for you to ask questions and chat with your fellow Food Blogger Pro members. It’s a great place to connect with fellow members, troubleshoot any issues you’re having, and brainstorm together. Our industry experts are always popping into the forum to help members with their questions. Casey Markee and Andrew Wilder are always popping in, and so is Danielle Liss, our legal expert. It’s a really great place to get access to these experts and have them help you with your concerns. The forum is also just a fantastic place to find a community in this food blogging space as you’re working to grow your site and your business. If you’re ready to join Food Blogger Pro and get access to our wonderful forum, head to foodbloggerpro.com/join to learn more about our membership. We really hope you enjoy this episode and can’t wait to see you next week for another great episode. Have an amazing week.