The Leap Interview: Confidently Navigating Tax Season as a Freelancer with Angie Moody

Tax season is upon us, and we all know it can be a daunting time. This week's episode of our podcast, Rachel Renock interviews Angie Moody, the CEO and co-founder of Ruby Money, a platform designed to help you manage your finances and navigate the complexities of taxes. In this blog post, we'll dive into the key takeaways from their conversation and provide you with some valuable tips to ease your anxiety around taxes and make the process a little smoother. Let's jump right in!

Taking Control of Your Taxes: The Ruby Money Solution

Taxes might not be everyone's favorite subject, but Rachel and Angie kick off the episode by sharing their personal experiences and acknowledging the anxiety that many freelancers and independent workers face during tax season. Angie, being a tax preparation specialist, emphasizes the importance of understanding your tax situation and taking control of it.

Angie's journey began when she experienced the challenges of managing administrative tasks and making financial decisions as a freelancer herself. Realizing that many others faced similar difficulties, she founded Ruby Money. This innovative app helps freelancers manage taxes and savings by tracking self-employment income, automating tax payments, and providing support and guidance throughout the tax process.

The "two for one" nature of the episode shines through as Angie not only connects with Rachel and her community but also brings her expertise and insights to the table. So, whether you're a freelancer just starting out or an established agency owner, let's explore some key strategies and tips discussed in their conversation.

Understanding Your Tax Situation: The First Step

The conversation between Rachel and Angie highlights a common fear among freelancers - the fear of the unknown and not knowing where to begin with taxes. This fear often leads to avoiding the issue altogether, which can cause problems down the line.

One mistake that many freelancers make is not having a plan in place. Knowing your tax rate is essential for understanding how much of your earned money is truly yours. Depending on your state and filing status, your tax rate can vary. Understanding your tax rate allows you to set aside the appropriate amount of money for taxes and avoid any surprises.

Angie suggests starting a practice of setting aside money for taxes from day one. Depending on your income and tax rate, this can range from 25% to 45% of your earnings. Automating this process by taking a portion of every client payment and moving it to a separate account can ensure that you consistently set aside money for taxes, even if your income is irregular.

Maximizing Deductions and Taking Advantage of Retirement Savings

As a freelancer, it's important to keep track of your business expenses and income in a separate bank account. This not only helps you stay organized but also allows you to take advantage of deductions for expenses related to your business, such as computer equipment, software subscriptions, and home office expenses. By deducting these expenses, you can lower your taxable income and potentially save money.

Additionally, Angie recommends considering tax-free retirement accounts, such as an IRA or SEP IRA, to shelter a portion of your profits from taxes. Contributing to an IRA not only helps you lower your tax bill but also enables you to save for the future. Even if you can only set aside a small amount, consistently contributing to an IRA can be a powerful wealth creation strategy.

Managing Your Finances and Taxes with Ruby Money

One of the highlights of Rachel and Angie's conversation is the introduction of Ruby Money as a helpful tool for freelancers and independent workers. Developed specifically to simplify finance management, Ruby Money offers various features, including income tracking, tax calculations, expense categorization, and even invoice creation.

The app also caters to freelancers' unique needs by automating quarterly estimated tax payments, reducing the stress of calculating and making these payments manually. Angie emphasizes the importance of using technology to proactively manage your finances and taxes, and Ruby Money is designed to make this process seamless.

Conclusion

Taxes don't have to be a source of stress and anxiety for freelancers and independent workers. By taking control of your tax situation, understanding your tax rate, setting aside money for taxes, maximizing deductions, and automating the process with helpful tools like Ruby Money, you can navigate tax season with confidence. Remember, finance management should be a support system that allows you to focus on your craft and thrive financially as a freelancer. So, embrace the opportunity to take control of your taxes and watch your freelance business soar to new heights!

[Podcast Offer: Use promo code "Wethos" for 50% off your first three months of Ruby Money's paid plan.]

Watch the full interview on YouTube or listen on Spotify.

Angie Moody The Leap Interview on YouTube

Angie Moody The Leap Interview on Spotify

Transcript:

[00:00:00] Tackling the Dreaded Tax Topic with Rachel Renock and Angie Moody

[00:00:00] Rachel Renock: It.

[00:00:00] Rachel Renock: Hey, everyone.

[00:00:01] Rachel Renock: Coming in with this week's episode of Leap this month.

[00:00:06] Rachel Renock: Today we're talking taxes, which is gonna be a great conversation, personally a topic I dread myself.

[00:00:13] Rachel Renock: So pretty excited to dig into this one and hopefully just alleviate some anxiety, generally speaking, around this time of year.

[00:00:24] Rachel Renock: Here we go.

[00:00:28] Rachel Renock: It.

[00:00:29] Rachel Renock: We did it.

[00:00:30] Rachel Renock: Hey.

[00:00:30] Rachel Renock: Hi.

[00:00:33] Angie Moody: So happy to have you.

[00:00:34] Rachel Renock: Thank you so much for joining us.

[00:00:35] Rachel Renock: I just really appreciate you taking the time.

[00:00:37] Angie Moody: Yeah, this is exciting.

[00:00:38] Angie Moody: It's like a two for one.

[00:00:40] Angie Moody: I get to hang out with you for 30 minutes.

[00:00:41] Angie Moody: I get to talk to your amazing community, I get to talk about taxes.

[00:00:44] Angie Moody: It's a win win.

[00:00:47] Rachel Renock: Yes, definitely.

[00:00:49] Rachel Renock: I was just saying how this is personally a topic that I absolutely dread, so I'm really happy to dig into it and just unpack all that.

[00:00:56] Rachel Renock: But let me do a little bit of an intro here and then we can get things going.

[00:01:00] Rachel Renock: Thanks.

[00:01:00] Interview with Angie Moody, Founder and CEO of Ruby Money

[00:01:06] Rachel Renock: Hey.

[00:01:07] Rachel Renock: I'm the co founder and CEO of Wethos, which is a platform that helps freelancers start and scale their businesses and studios.

[00:01:14] Rachel Renock: Every month, I interview different creative entrepreneurs about their journey taking the Leap.

[00:01:18] Rachel Renock: And I'm super excited about this week's guest, Angie, who actually runs a company, an app for freelancers, to help them manage their taxes and their savings.

[00:01:28] Rachel Renock: So Angie is the founder and CEO of Ruby Money.

[00:01:31] Rachel Renock: It's a mobile app to help freelancers earn more and avoid costly tax mistakes, which honestly, personally, definitely have been there since its founding in 2021, angie's raised over $2 million in funding.

[00:01:43] Rachel Renock: Fun fact, we share investors.

[00:01:45] Rachel Renock: For those of you out there who are wondering, ruby Money actually launched its flagship app in this App store, and it tracks self employment, income, and then it helps you basically save for quarterly taxes and then automatically pay those taxes, which is pretty amazing.

[00:02:00] Rachel Renock: So super excited.

[00:02:02] Rachel Renock: Angie, before becoming entrepreneur, which is good context to have, was actually in leadership roles at Instagram, Capital One, Visa.

[00:02:08] Rachel Renock: She's been all over the fintech scene, has taught me a lot personally, and was born and raised in New Orleans, currently living in Charleston, in the south.

[00:02:17] Rachel Renock: I'm also in the south right now, so it's just a whole Southern party here.

[00:02:20] Angie Moody: Yeah.

[00:02:22] Rachel Renock: Appreciate you joining us, Angie.

[00:02:25] Ensuring the Financial Stability of Freelance Professionals

[00:02:25] Rachel Renock: I'd love to just start quickly with a little bit of backstory and how you landed on this specific problem when it comes to independent businesses.

[00:02:33] Angie Moody: Yeah.

[00:02:34] Angie Moody: And again, thanks, Rachel, for having me in that super sweet intro.

[00:02:39] Angie Moody: I mean, I think similar to weathos, our mission is really to make entrepreneurship sustainable for anybody who dares to take the you know, I know firsthand when I was consulting and freelancing in between my different corporate gigs, I was very shocked by the amount of administration and the number of decisions you had to make and how hard it was to do all of the things that were outside of the craft.

[00:03:07] Angie Moody: And there wasn't an accounting department, there wasn't an HR department, there wasn't a finance department.

[00:03:12] Angie Moody: Like you, you're all the departments, right?

[00:03:16] Angie Moody: And there was just a lot of administrative tedium.

[00:03:18] Angie Moody: And as somebody who likes to be organized, likes to be on top of stuff, I just found myself constantly drowning in a sea of details.

[00:03:28] Rachel Renock: Totally.

[00:03:28] Angie Moody: I think a lot of people kind of can relate to that.

[00:03:32] Angie Moody: And I remember this one year during COVID when I had a pretty lucrative product consulting gig.

[00:03:37] Angie Moody: I went to my husband's accountant.

[00:03:40] Angie Moody: He kind of managed the accountant relationship for our family because I always had pretty simple w two taxes.

[00:03:44] Angie Moody: And it was kind of too late to the point where I realized that I hadn't really tracked anything separately.

[00:03:50] Angie Moody: I hadn't known about any of the different deductions, I hadn't really thought of myself as a small business owner.

[00:03:56] Angie Moody: And so fast forward, I had overpaid my taxes.

[00:04:00] Angie Moody: Well, I had a big surprise tax bill that I hadn't budgeted for.

[00:04:04] Angie Moody: But I found out after the fact that it was about twelve grand more than it should have been because I just made stupid mistakes.

[00:04:10] Angie Moody: And I think was a woman, particularly me.

[00:04:15] Angie Moody: I have a finance degree, I worked at a bank.

[00:04:17] Angie Moody: I was a little embarrassed and ashamed, like how did I screw this up so bad?

[00:04:21] Angie Moody: And then that's where the light bulb moment, that's where I had that ad hob like, well wait a second, there's just no way I'm the only one.

[00:04:28] Angie Moody: And so I started reaching out to all the other people I knew who consulted and freelanced and found out that just the number of things you have to keep track of when you're earning income independently and knowing what the forms are and knowing what taxes to pay.

[00:04:41] Angie Moody: There's just a lot there.

[00:04:42] Angie Moody: And so that was kind of the inspiration behind the company.

[00:04:45] Angie Moody: But when kind of fast forward to now, I think it's ultimately this idea of as a self employed person, your time is incredibly valuable and every minute of your day is really important.

[00:04:56] Angie Moody: You should be using that to do something you love, something that brings you joy or something you're getting paid for.

[00:05:01] Angie Moody: And for most freelancers, and most creative freelancers, figuring out finance is not one of them.

[00:05:08] Angie Moody: And so for the things that don't bring you joy that you aren't getting paid for, how do you automate them, how do you outsource them?

[00:05:14] Angie Moody: And so, you know, I really wanted Ruby Money to come into the world and be a tool that helped make it possible for more freelancers to take that leap to thrive financially.

[00:05:25] Angie Moody: You know that there are systems and organizations like Wetos and Ruby Money that are here to take some of that load with them and walk the path with you.

[00:05:33] Angie Moody: And taxes is the load we take.

[00:05:36] Rachel Renock: Totally.

[00:05:38] Rachel Renock: It honestly makes me feel so much better because I have also been a freelancer and I went to art school and so when I screwed all this up similarly I was already like beating myself up and being like wow I really am a dumb ass.

[00:05:52] Rachel Renock: Honestly, this makes me feel better to just hear from somebody who has a literal finest degree, like no, there's just not a clear playbook for a lot of this.

[00:05:59] Rachel Renock: And a lot of the lines are blurry between personal and business.

[00:06:02] Rachel Renock: And when you are your business, it can definitely get a little weird, I guess, in terms of taxes in particular.

[00:06:10] Understanding the Challenges that Freelancers Face with Taxes

[00:06:10] Rachel Renock: So would love to just understand from what you're hearing from people what are some of the biggest challenges, what are the things that tend to overwhelm people when it comes to their taxes and cause just like a lot of stress.

[00:06:23] Angie Moody: Yeah I mean I think it's like literally the word taxes, right?

[00:06:26] Angie Moody: It's the fear of the triggering.

[00:06:29] Angie Moody: It's this mix of like I have to give away my money and then the three scariest letters in the world like to speaking of being feeling like a dumbass I mean I feel like if you go to IRS gov they should have basically just put a huge pop up that says like you're a dumbass.

[00:06:45] Angie Moody: Good luck right.

[00:06:49] Angie Moody: Really is fear of the unknown and so I think that's why a lot of people will sort of outsource this entire category to an elder in their life or everyone's like their uncle's CPA, their father's CPA, totally whatever.

[00:07:03] Angie Moody: And I think the challenging thing about that is that if you are a professional freelancer, if you're offering a creative service, a knowledge service literally taxes are your number one expense separate from hiring other contractors.

[00:07:15] Angie Moody: You don't have inventory sitting around, you're not selling cups and t shirts on Etsy.

[00:07:21] Angie Moody: You're selling your knowledge, you're selling your brain, you're selling your talent.

[00:07:23] Angie Moody: And so taxes are literally going to be 25% to 45% of your income.

[00:07:28] Angie Moody: And so I think recognizing that and knowing that, that then becomes part of your business strategy.

[00:07:34] Angie Moody: How do you tackle that?

[00:07:35] Angie Moody: How do you create a cash flow plan for that and how do you create a strategy frankly to lower that.

[00:07:41] Angie Moody: And so I think just not knowing where to begin and therefore putting your head in the sand and doing nothing is kind of the number one thing I see.

[00:07:49] Angie Moody: I think the second thing I see is the confusion between kind of the year round tax process of estimating and saving for taxes and tracking your deductions and then this thing that's happening right now as we approach April, which is the annual filing of taxes.

[00:08:04] Angie Moody: And we can go into that, but I think a lot of us are used to the annual filing of taxes.

[00:08:08] Angie Moody: But when you become self employed there's this whole other thing that happens year round that can be very mystifying and it's really important to get it done and that's what we really work on.

[00:08:19] Rachel Renock: Yeah, I feel like that is a huge misconception because it's so easy to go from just being like an everyday consumer person to suddenly a freelancer, which is classified as a business and that's just got a totally different ballgame to it, but they don't necessarily make that easy.

[00:08:35] Rachel Renock: And frankly, to your point about not having inventory and not needing physical products and things, it should be easier than ever to start a freelance business today and yet it still is not.

[00:08:46] Rachel Renock: It still is super complicated.

[00:08:48] Rachel Renock: So I feel like that's a totally understandable thing.

[00:08:51] Rachel Renock: That and I definitely understand the analysis process of not knowing what to do.

[00:08:55] Angie Moody: Or how to start.

[00:08:56] Rachel Renock: So you just don't do anything which can really bite you.

[00:09:01] Common Mistakes and Best Practices in Managing Taxes for Freelancers and Small Businesses

[00:09:01] Rachel Renock: What do you think is like the number one mistake that you see people are making when it comes to managing the tax or filing the taxes?

[00:09:09] Rachel Renock: Or maybe to your point earlier, like paying more than yeah, I mean, it's.

[00:09:13] Angie Moody: Hard to pick one, but I think it's this concept of having a plan.

[00:09:16] Angie Moody: I think it's knowing what you're going to pay in taxes.

[00:09:20] Angie Moody: Like basically knowing your tax rate.

[00:09:21] Angie Moody: It's kind of like not knowing your rate.

[00:09:23] Angie Moody: Right.

[00:09:23] Angie Moody: You know your rate if someone says, what do you charge, what your scope is?

[00:09:26] Angie Moody: Right.

[00:09:26] Angie Moody: Wesos is in the business of helping you figure out what your rate.

[00:09:29] Angie Moody: The kind of second question is how much of this money is mine?

[00:09:32] Angie Moody: So what is your tax rate?

[00:09:34] Angie Moody: And it's like a checkup.

[00:09:36] Angie Moody: It's like knowing what your blood pressure is.

[00:09:37] Angie Moody: You should just generally know what your tax rate is because that is going to give you foundationally an understanding of how much of this money that I'm earning is mine.

[00:09:45] Angie Moody: Right.

[00:09:45] Angie Moody: And so it depends on the state you live in, your sort of filing status and how much you think you're going to make for the year.

[00:09:51] Angie Moody: But most people, it's going to be some people it'll be as low as 20%.

[00:09:54] Angie Moody: But for a lot of people, especially if you live in California and New York, you might end up paying close to 40% of your net income and self employment taxes.

[00:10:04] Angie Moody: So I think that's the most important thing is just like the awareness that it exists.

[00:10:10] Angie Moody: I think once you get past that, it's like, well, what are you doing about it every day?

[00:10:14] Angie Moody: How are you creating a practice so that you have budgeted to set that money aside?

[00:10:19] Angie Moody: And so I found that a lot of people are like, well, when I worked for a company, my company just did that.

[00:10:24] Angie Moody: Well, they don't file your end of your taxes, but what they do is every time you get paid, there's a little bit of money that comes out of your paycheck.

[00:10:31] Angie Moody: You never see it never lands in your bank account.

[00:10:32] Angie Moody: And it goes to the IRS.

[00:10:34] Angie Moody: And so recreating that experience by creating an automation to almost take that out of your own net pay and set that aside so that when you do come to pay your taxes either quarterly or at the end of the year, that money is gone.

[00:10:48] Angie Moody: You're not counting on it.

[00:10:50] Angie Moody: You're not having this heart attack moment that everyone's about to have when they click pay on April 15 and they see this huge chunk of money go out their business account because it's already gone.

[00:11:02] Angie Moody: Right?

[00:11:02] Angie Moody: It was never their money to begin with.

[00:11:04] Angie Moody: They were borrowing it from the IRS so they're setting it aside every time they get paid.

[00:11:09] Angie Moody: That's literally what we recommend is every time a client pays you, you get $1,000.

[00:11:14] Angie Moody: You take that estimated tax rate, 23%, 33%, whatever it is and you immediately take that $330 and you move it to a separate account and later on maybe you find some tax deductions, you might find some extra money there, but at least you've set that money aside.

[00:11:32] Angie Moody: And when you go to make investments in your business or pay yourself, you're doing it from like a true net income.

[00:11:40] Angie Moody: You're not accidentally spending the IRS's money.

[00:11:44] Rachel Renock: Yeah.

[00:11:44] Rachel Renock: And I feel like when it comes to setting that money aside, the best way to do it is to set up that automation.

[00:11:50] Rachel Renock: Because especially when so many people, like I know in particular, are doing a lot of project based stuff and so the actual income isn't every two weeks like you would have like a normal paycheck.

[00:12:02] Rachel Renock: It is very up and down and they can be in big chunks over here and smaller chunks over there.

[00:12:06] Rachel Renock: And so having that automation set up, I think, is probably the best way to handle it in general, just to make sure that you're being safe about it when it comes to I want to talk a little bit.

[00:12:18] Wealth Creation Strategies for the Self-Employed

[00:12:18] Rachel Renock: About?

[00:12:18] Rachel Renock: What are the hacks when it comes to getting money back from the IRS or writing stuff off that you may not be writing off right now?

[00:12:27] Rachel Renock: What do you think are the top couple of things that people don't miss basically?

[00:12:31] Angie Moody: So I think you should not try to get money back from the IRS.

[00:12:34] Angie Moody: I know people there's all these ads everywhere that's like I can get you 5000 back from the IRS.

[00:12:39] Angie Moody: If you're doing them, that means you overpaid the IRS, right?

[00:12:42] Angie Moody: What you want to do is pay them what they owe them.

[00:12:45] Angie Moody: But kind of no more or no less, right?

[00:12:47] Angie Moody: You pay less, you pay penalties, you pay more.

[00:12:49] Angie Moody: You've given the IRS money that you could have used to spend on a vacation or invest in your business.

[00:12:53] Angie Moody: And so I think the important thing to do is get a really good sense of what your business deductions are throughout the year.

[00:13:02] Angie Moody: Don't wait until the year is done and it's February and you're running around with spreadsheets and credit card statements and you're uploading stuff to some CPA's portal and they don't know your business.

[00:13:13] Angie Moody: They don't know why you ate out this day.

[00:13:16] Angie Moody: They don't know that you need a ring light and a tripod to do ID lives, right?

[00:13:20] Angie Moody: And so keeping track of that year round is really important.

[00:13:24] Angie Moody: So I think one of the biggest hacks is having a separate bank account for your business expenses and your business income.

[00:13:31] Angie Moody: It doesn't have to be a business bank account.

[00:13:32] Angie Moody: It doesn't have to be fancy.

[00:13:33] Angie Moody: It just has to be a separate bank account because then you know, all the money that gets spent out of that account is for your business and you don't miss any of those business expenses.

[00:13:43] Angie Moody: So that's just like basic because so many people I know just are like, well, I didn't make a lot of money this year.

[00:13:49] Angie Moody: I just didn't keep track of my expenses.

[00:13:51] Angie Moody: Well, I mean, money is money, right?

[00:13:54] Angie Moody: Whether it's $10 or $100, it's money.

[00:13:57] Angie Moody: The second hack is around, there's a couple.

[00:14:02] Angie Moody: So deductions are an interesting thing because most deductions are actually the expenses you spend on your business, right?

[00:14:07] Angie Moody: Like your computer, your software, subscriptions.

[00:14:10] Angie Moody: Those are really important to keep track of because you get 30% of that back in the form of a tax refund, but you still spent the money, right?

[00:14:18] Angie Moody: The money is not like money is gone.

[00:14:21] Angie Moody: The best hack that I like sharing with self employed people is tax free retirement.

[00:14:26] Angie Moody: And what I basically call that it's a profit shelter.

[00:14:30] Angie Moody: It is a loophole that the IRS has created specifically for self employed people to say, like, I'm going to give you the ability to stash 25% of your profits away from the IRS.

[00:14:41] Angie Moody: We won't see them, we won't tax them.

[00:14:43] Angie Moody: The trick is they have to go into a special account called an IRA, an Individual Retirement Account.

[00:14:49] Angie Moody: And if you're self employed, there's like a bonus account called a Sep IRA, which allows you to put up to 25% of your profits as a solopreneur.

[00:14:57] Angie Moody: So just like to give you a very quick math example.

[00:15:00] Angie Moody: If you were to maybe you make 75, $100,000, you get that big kind of six figure goal for the year.

[00:15:08] Angie Moody: You say you're going to put 10% of that $10,000 of your profit into an IRA account.

[00:15:14] Angie Moody: Let's say you live in a medium high tax state like New York, and your tax rate is 35%.

[00:15:19] Angie Moody: 3500 of that 10,000 that you put away immediately comes off your taxes.

[00:15:26] Angie Moody: So your tax bill just dropped by 3500, but you didn't actually spend the money, you just paid future you.

[00:15:33] Angie Moody: So it's this concept of paying yourself first, paying future you.

[00:15:38] Angie Moody: And so granted, you can't touch that money for a few years, but it hasn't gone to the IRS.

[00:15:44] Angie Moody: You've stashed that profit.

[00:15:46] Angie Moody: And when you start talking to small business owners and you start talking to really big business owners, this is literally one of the top wealth creation strategies.

[00:15:56] Angie Moody: And I think freelancers just think like, oh, it's not for me, I'm not wealthy enough, but it's just pure gravy.

[00:16:03] Angie Moody: And so even if you're only setting aside $100 every paycheck or a couple of hundred every month, rather than putting that in a brokerage account or Robinhood or crypto or whatever TikTok is telling you to do, just like be boring and put it in an IRA, because the money works double for you.

[00:16:21] Angie Moody: It lowers your taxes and it earns interest over time.

[00:16:27] Rachel Renock: Yeah.

[00:16:27] Rachel Renock: And going back to your point about people kind of disqualifying themselves from thinking like, oh, this is a strategy that I can do and implement.

[00:16:35] When Should I Begin Saving as a Freelancer?

[00:16:35] Rachel Renock: I guess one thing that's on my mind is, is there an inflection point in a freelance business where they should start to make that shift?

[00:16:43] Rachel Renock: Is it something that ideally you do from day one?

[00:16:45] Rachel Renock: But realistically, the idea, I think when you have really early days, like kind of volatile income of putting something into an account that I can't touch in case of an emergency or whatever, is scary.

[00:16:58] Rachel Renock: What's sort of your sense in terms of what the right inflection point is?

[00:17:02] Rachel Renock: Or is it your advice to say from day one you should be doing that regardless of how predictable, basically your income?

[00:17:09] Angie Moody: Yeah, I think that's a really good question.

[00:17:11] Angie Moody: So I think taxes, unfortunately, nothing's more certain in life than death and taxes.

[00:17:15] Angie Moody: So you should set aside money for taxes first.

[00:17:18] Angie Moody: I think most financial advisors will say make sure you have six months of living money set aside, right?

[00:17:27] Angie Moody: So between you and your spouse and any other income you have, make sure you have some sort of bank account where your car breaks down, you need to go see a doctor, you have that cash set aside.

[00:17:38] Angie Moody: I think once you have those covered, then you're operating in the space where you're either bonusing yourself or you're investing more in your business and that will be different for everyone.

[00:17:50] Angie Moody: But when you get that point where it's like, okay, my taxes are covered, I'm setting aside 20%, 25% for taxes.

[00:17:56] Angie Moody: I've got enough where I'm not going to not be able to pay my rent this month.

[00:18:00] Angie Moody: That's the point where I would say whether it's 2-3-5 turn on that IRA savings rule and you can always decide at the end of the year to.

[00:18:11] Rachel Renock: Not invest that money.

[00:18:13] Angie Moody: You can make the trade off of like cash now versus cash later, but for most people, once it's set aside, they're pretty excited about it being there.

[00:18:23] Angie Moody: And very rarely have any of our members taken the money out.

[00:18:27] Angie Moody: If anything, they're like, wait, I can go up another percent.

[00:18:30] Angie Moody: Because the way that our app works is we ask you to choose a percent because you can't choose a whole dollar amount.

[00:18:35] Angie Moody: You don't know what your next invoice is going to be for right.

[00:18:37] Angie Moody: So we have you choose a percent.

[00:18:39] Angie Moody: And so people start at 3% and then they just kind of tick up over time to the point where they're stashing away real money.

[00:18:47] Angie Moody: And the tax benefits of it is so huge that it becomes addictive.

[00:18:55] Rachel Renock: And that can compound over time, for sure.

[00:18:58] Rachel Renock: I guess what I'm hearing you say is build up that foundation, the six months, the safety net essentially for yourself.

[00:19:03] Rachel Renock: And when you can get to that point, your month to month cash flow or income being super predictable becomes less of an issue or less of a risk in terms of setting aside money with each invoice that is getting paid, basically.

[00:19:16] Rachel Renock: Because if something does come up, at least you have that safety net.

[00:19:19] Understanding and Managing Annual and Quarterly Taxes for Freelancers

[00:19:19] Rachel Renock: So that totally makes sense, I think, from one question that we get all the time or something that blindsides people a lot.

[00:19:27] Rachel Renock: Is that like quarterly versus annually situation?

[00:19:30] Rachel Renock: Can we unpack that a little bit?

[00:19:33] Rachel Renock: What is the difference when and how and why should people be doing it quarterly or annually?

[00:19:40] Angie Moody: This is such scary topic for people that I think we literally just rebranded our homepage or we were thinking about like quarterly taxes done for you because it's so people are just like, I don't get it.

[00:19:54] Angie Moody: What do you want me to do?

[00:19:55] Angie Moody: So here's the like you should be paying the IRS literally every time you earn money.

[00:20:01] Angie Moody: And that's when you work for an employer, they do it for you via payroll provider every two weeks.

[00:20:06] Angie Moody: When you work for yourself, they're like every two weeks.

[00:20:08] Angie Moody: That kind of seems like a lot we're mean, but we're not that mean.

[00:20:11] Angie Moody: So we're just going to go ahead and say like four times a year, four times a year, go ahead and send us what you think you owe us.

[00:20:18] Angie Moody: We're not going to tell you what you owe us, but we're going to just have you guess, like, guess how much you owe us and send it in four times a year.

[00:20:25] Angie Moody: And that's called quarterly taxes.

[00:20:27] Angie Moody: If you don't do that and you wait until April of the following year, they're like, you kind of owed us all this money all year and thanks for paying us now, but that's not cool.

[00:20:37] Angie Moody: And they will apply a tax penalty on your tax return.

[00:20:41] Angie Moody: And I would tell anybody who has ever had a CPA to file their taxes.

[00:20:46] Angie Moody: I went back and looked at my last couple of years tax return.

[00:20:48] Angie Moody: Your CPA doesn't tell you about this.

[00:20:50] Angie Moody: They just calculate it and put it on there.

[00:20:51] Angie Moody: And so I was like, what?

[00:20:52] Angie Moody: I paid $600 in IRS penalties for not paying quarterly taxes.

[00:20:58] Angie Moody: That's nuts.

[00:20:59] Angie Moody: It's no one's responsibility to do that for you.

[00:21:03] Angie Moody: You're just supposed to magically know how to do it.

[00:21:05] Angie Moody: So that's kind of how quarterly estimated taxes work now.

[00:21:09] Angie Moody: For some people, it's worth it to have that cash flow throughout the year and just cut that big check at the end of the year and pay that three, four, five $600 IRS penalty.

[00:21:20] Angie Moody: I think that that's a dangerous, slippery slope to be on unless you have a really complex understanding and a really stable understanding of your finances and you have professionals advising you to do that.

[00:21:30] Angie Moody: The safer way is to just follow the recommendations, make those quarterly estimated payments.

[00:21:35] Angie Moody: Now, sadly, most people who have had to pay quarterly estimated payments have been larger businesses, right.

[00:21:42] Angie Moody: This whole freelance industry is still fairly nascent, and so there aren't a lot of tools out there to tell you what those quarterly estimated payments will be.

[00:21:48] Angie Moody: So your options are either, like, stick your finger in the air there's a really scary form on the IRS website that you could download and try to figure it out yourself.

[00:21:58] Angie Moody: I've done it.

[00:21:59] Angie Moody: It's challenging.

[00:22:01] Angie Moody: Or you could pay a CPA, and some CPAs will take a couple hundred bucks from you every quarter, and they'll calculate your quarterly taxes for you.

[00:22:10] Angie Moody: So what we did at ruby money is we just took that crazy document and the formula that all the CPA use.

[00:22:15] Angie Moody: We build it into the app, and so we self calculate what your estimated payment should be based on what you've already made so far this year.

[00:22:22] Angie Moody: So we check your income four times a year, we check your expenses, and we give you that estimate so you can make that quarterly payment and never worry about getting a surprise tax bill at the end of the.

[00:22:35] Rachel Renock: I mean, I feel like every lesson I've learned about the IRS is always the hard.

[00:22:40] Rachel Renock: Like, it's always because I already screwed it up and then I found out later, and.

[00:22:47] Angie Moody: I mean, isn't that, like, how you feel about it's?

[00:22:54] Angie Moody: Like, it's never obvious until you've already done the opposite and learned the hard way.

[00:22:59] Angie Moody: So there's no shame.

[00:23:01] Angie Moody: It bothers me that people either feel shame that they did it the wrong way or feel like it's too hard to learn.

[00:23:13] Angie Moody: Even the way that we're talking about sometimes.

[00:23:15] Angie Moody: I'm like the app is easier than this conversation.

[00:23:20] Angie Moody: You don't have to know any of the things that I just talked about to kind of automate this and put it in place.

[00:23:26] Angie Moody: That's sort of the goal of this is like, we got you.

[00:23:28] Angie Moody: I want to explain it so people understand the method behind the madness and what's happening to their money.

[00:23:33] Angie Moody: And I think financial education needs to be a part of high school curriculum.

[00:23:38] Angie Moody: It needs to be a part of art school.

[00:23:39] Angie Moody: It needs to be part of everything we do.

[00:23:42] Angie Moody: Right.

[00:23:43] Angie Moody: And so I think it's important to know a little bit about how it works.

[00:23:45] Angie Moody: But just a little bit.

[00:23:47] Rachel Renock: Just a little bit.

[00:23:49] Rachel Renock: Yeah, just enough.

[00:23:50] Rachel Renock: Because I think if you get too deep into it, you either get infuriated as the deeper you understand how chaotic the system actually is, and arbitrary how it all is, or you just lose your mind slowly because it's just a ridiculous complicated thing to understand.

[00:24:05] Rachel Renock: And it's complicated on purpose, and it's like, convoluted on purpose.

[00:24:09] Rachel Renock: So they don't expect you to they're not trying to make it easy, basically.

[00:24:13] Rachel Renock: But good thing we have technology to layer on top and to help sort of streamline that whole process.

[00:24:19] Freelancing Advices from Angie Moody, the founder of Ruby Money

[00:24:19] Rachel Renock: Andy, one last question that I ask all of our guests, which is, do you have one piece of advice for any freelancers out there who are either thinking about taking the leap or have recently taken the leap either by choice or maybe not, given all the layoffs that are going on?

[00:24:35] Angie Moody: Yeah.

[00:24:35] Angie Moody: I'm really happy you didn't ask me, like, what's your favorite song right now?

[00:24:38] Angie Moody: Or something very pop culture.

[00:24:42] Angie Moody: I'd be like, what do cool people say their favorite song is right now?

[00:24:49] Rachel Renock: You were like tanning.

[00:24:50] Rachel Renock: You thought that's hilarious.

[00:24:50] Rachel Renock: I was like, oh, God, I would hate that.

[00:24:53] Angie Moody: Yeah.

[00:24:54] Angie Moody: So this one's way easier.

[00:24:58] Angie Moody: You just got to do it, right?

[00:25:00] Angie Moody: You got to jump in.

[00:25:02] Angie Moody: I was held back for a number of years, working in very kind of illustrious corporate jobs and got very lucky.

[00:25:09] Angie Moody: And then I had times where I got laid off from my illustrious corporate jobs, and I was panicked about what to do next.

[00:25:14] Angie Moody: And I think the most important thing to just believe is that you have a gift.

[00:25:18] Angie Moody: You had those jobs because you have a gift, you have a skill, you have a talent.

[00:25:22] Angie Moody: There are multiple ways to go to market with your talent, right?

[00:25:26] Angie Moody: The traditional corporate workforce, talking to recruiters, that is one way, and that might be the way you're most comfortable with.

[00:25:32] Angie Moody: But there's now so many new ways and paths that are being formed for you to take your skills to market.

[00:25:39] Angie Moody: And this is such an amazing opportunity that, frankly didn't exist 15 years ago, where you get to it's like build a blocks, right?

[00:25:46] Angie Moody: Build a bear.

[00:25:46] Angie Moody: You get to make the career you want.

[00:25:49] Angie Moody: How many clients do you want?

[00:25:50] Angie Moody: How many projects do you want?

[00:25:52] Angie Moody: I was just talking to this amazing guy, Ernie Pac that started a newsletter called Part Time Tech, and it's full of engineers from laid off tech companies that are like, you know, I never really liked this lifestyle.

[00:26:06] Angie Moody: I've always wanted to just work 25 hours a week, do a project on the side, and hang out with my kids.

[00:26:14] Angie Moody: Can we all band together and start asking traditional employers to hire us part time?

[00:26:21] Angie Moody: And so I just think there's so many opportunities to kind of buck the system, try new paths, and so have faith in yourself and faith in the journey.

[00:26:30] Angie Moody: It won't be easy.

[00:26:31] Angie Moody: I think you and I can attest that carving your own path as, like, female entrepreneurs and fintech is hard.

[00:26:38] Angie Moody: I think every time that I've been a consulting as a freelance role, there is a.

[00:26:44] Angie Moody: Period of like, am I good enough to be here?

[00:26:46] Angie Moody: That you go through, but you just recognize there's absolutely a market for what you're good at.

[00:26:52] Angie Moody: And you have to hustle, right?

[00:26:55] Angie Moody: You have to hustle whether you're applying for full time jobs or looking for consultants and just sort of embrace that and just have faith in yourself and give yourself grace and use us.

[00:27:10] Angie Moody: We can help you but be part of communities of like minded people, right?

[00:27:15] Angie Moody: The more solopreneurs and freelancers, you know, that you reach out to that you connect with, the more the universe will open up to you.

[00:27:24] Angie Moody: You know, once you say you want to do something out loud and you tell like two people, all of a sudden they tell you four other people that want to do the same thing and it just kind of is like it snowballs.

[00:27:33] Angie Moody: So just make your intention known and start taking a couple steps in that direction and let the world take over the rest.

[00:27:41] Angie Moody: Awesome.

[00:27:42] Rachel Renock: I love that.

[00:27:43] Ruby Money: A Financial Assistant for Freelancers

[00:27:43] Rachel Renock: Angie, if people want to follow along, if they want to download the app, where's the best place they can do that?

[00:27:49] Rachel Renock: And we've got a little partnership special going on here.

[00:27:51] Rachel Renock: Can you tell everybody a little bit more about that?

[00:27:53] Angie Moody: Yeah, you can definitely just follow us on Instagram.

[00:27:55] Angie Moody: You can go to our website, rubymoney us.

[00:27:57] Angie Moody: The app is in the Apple App store.

[00:27:59] Angie Moody: We're still working on Android right now, but you can download it in the App Store and get started.

[00:28:04] Angie Moody: The app is free.

[00:28:06] Angie Moody: We do have a paid plan that does some of the fun, exciting things, like pays your taxes for you and lets you have quarterly calls with a tax advisor.

[00:28:16] Angie Moody: But there is still a free version of the app that you can use to track your income and track what you owe in taxes.

[00:28:21] Angie Moody: And so I encourage everyone at a minimum to do that, figure out what your tax rate is just so you have that knowledge going forward.

[00:28:28] Angie Moody: The special is that for Wethos members, we're offering 50% off for your first three months of the pro paid plan.

[00:28:36] Angie Moody: And so just when you decide to upgrade to the paid plan, just put Lethos promotion code in there and that will just knock the price down and make it easy breezy to kind of give us a try.

[00:28:48] Angie Moody: But yeah, just really excited to help out all of the is there a word?

[00:28:53] Angie Moody: Do we have like a Wethos e?

[00:28:55] Angie Moody: Do we call Wethos?

[00:28:56] Rachel Renock: We do people something?

[00:28:58] Rachel Renock: We have a link for the oh, no, we fees.

[00:29:04] Rachel Renock: It's going to be a no from me.

[00:29:07] Rachel Renock: I'm not sure that that'll ever be a thing for us.

[00:29:10] Rachel Renock: It's just that the word is weird.

[00:29:12] Rachel Renock: The whole thing would be weird.

[00:29:16] Rachel Renock: I'm not that fun.

[00:29:17] Angie Moody: I don't know, but you do.

[00:29:18] Angie Moody: But some awesome new swag that I see.

[00:29:20] Angie Moody: Everybody's like angling before now.

[00:29:23] Rachel Renock: Yeah, I do.

[00:29:25] Rachel Renock: I've got a sweater here.

[00:29:26] Rachel Renock: Hang on.

[00:29:28] Rachel Renock: Here we go.

[00:29:29] Rachel Renock: We're going to start sending these out.

[00:29:32] Angie Moody: So cute.

[00:29:32] Angie Moody: Love it.

[00:29:33] Rachel Renock: A little bit of nice.

[00:29:36] Rachel Renock: We love it.

[00:29:37] Rachel Renock: Love the purple lavender.

[00:29:40] Angie Moody: Because the world does not need another black tech hoodie.

[00:29:44] Rachel Renock: It does not.

[00:29:45] Angie Moody: That is correct.

[00:29:46] Rachel Renock: It needs a purple hoodie.

[00:29:47] Rachel Renock: And now it has one.

[00:29:49] Rachel Renock: Amazing.

[00:29:50] Rachel Renock: Well, Andy, thank you so much again for joining us.

[00:29:52] Rachel Renock: This was amazing.

[00:29:53] Rachel Renock: So many learnings.

[00:29:53] Rachel Renock: We'll be reposting the full video, some clips, all the things in the coming weeks.

[00:29:59] Rachel Renock: But for those of you who are stressed out right now, go check out Ruby money.

[00:30:03] Rachel Renock: Me, I signed up myself.

[00:30:04] Angie Moody: I went through the whole flow.

[00:30:05] Rachel Renock: The calculator is amazing.

[00:30:07] Rachel Renock: Really does make you feel a lot better about your just life in general.

[00:30:13] Rachel Renock: So definitely check it out.

[00:30:14] Rachel Renock: I would recommend that we'll be back next month with another guest and another episode of The Leap.

[00:30:19] Rachel Renock: Have a good night, everybody.

[00:30:20] Rachel Renock: Thanks again.

[00:30:21] Rachel Renock: Bye.