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Definitely don't use a CPA with an expired license! My husband and I made that mistake last year and got audited because of improper deductions they claimed. It's been a 9-month nightmare trying to fix everything. When we confronted them about their license, they gave excuses about "being in the renewal process" - turns out they had been practicing without a license for 3 YEARS. Complete disaster. Make sure to get references from people who've worked with them for multiple years, not just someone who had a good first impression. And as someone else mentioned, ask specifically about their experience with your situation (marriage, investments, whatever makes your taxes complex).
Yikes, I'm so sorry you went through that! Thanks for the warning - this is exactly the kind of situation I'm trying to avoid. I'm definitely going to verify active licensure before moving forward. Did you end up finding a legitimate CPA after that experience?
Yes, we eventually found a great CPA through my coworker who's been using him for years. The difference was night and day - our new CPA provided all his credentials upfront without being asked and even showed us his professional liability insurance certificate. One tip: when we interviewed him, he asked US detailed questions about our situation rather than making generic promises about maximizing refunds. That level of detailed interest was a good sign he actually knew what he was doing. He also explained exactly why the previous deductions were improper and helped us file amendments. Good luck with your search!
Honestly the state databases are sometimes very slow to update. My CPA's license showed as "pending renewal" for like 3 months after she'd actually completed everything. Before panicking, maybe just call or email them and ask about it directly? A good professional will understand your concern and provide proof of current licensure. They might even have a paper certificate or email confirmation they can share while the database catches up.
This is a really good point. Government websites are notoriously outdated sometimes. I'd definitely ask them about it - their response will tell you a lot about how they handle client concerns.
One important thing no one's mentioned yet: if this is a true cannabis "plant-touching" operation, there are MAJOR tax implications beyond just the structure of your investment. Under Section 280E, cannabis businesses can't deduct normal business expenses because it's federally illegal. This means the business itself will have much higher effective tax rates, which directly impacts your returns. Make sure the PE firm's projections are accounting for this - many don't, which makes their return forecasts totally unrealistic. Also, depending on your state, you may need to register as an "interested party" with the cannabis regulatory body, even as a passive investor. Some states have restrictions on out-of-state investors too.
Is this still true with all the recent changes to federal cannabis policy? I thought things were changing with banking and taxes.
Yes, it's absolutely still true. While there have been some banking improvements with the SAFE Banking provisions, Section 280E is still very much in effect and will remain so until cannabis is rescheduled or descheduled at the federal level. The recent policy changes have mainly affected banking access and research, but the tax code restrictions remain unchanged. Any legitimate PE firm in the cannabis space should be building their financial models with 280E limitations factored in, resulting in effective tax rates that can reach 50-70% depending on the operation's structure. Always ask to see their tax assumptions when reviewing projected returns.
A bit off topic, but how are you verifying this cannabis PE firm is legitimate? I've seen a TON of scams in this space. Did they provide a private placement memorandum? Are they registered with the SEC? Have you verified the actual ownership of the farm they're investing in? Just be careful. The cannabis industry attracts a lot of shady operators because of the legal gray areas and limited banking options.
Thanks for bringing this up - honestly I haven't done as much due diligence as I probably should. They did provide an investment memorandum but I haven't verified SEC registration or the actual farm ownership. Do you have suggestions for what specific documents I should be requesting or how to verify their legitimacy?
Absolutely. Request their Form D filing with the SEC (all private offerings should have this), check the backgrounds of all principals through FINRA BrokerCheck, and get proof of the actual cannabis licenses they hold or have applied for. Also ask for references from current investors, and ideally visit the actual operation if possible. Request their detailed tax strategy document specifically addressing 280E issues - legitimate operators will have this prepared. Finally, have an attorney experienced in cannabis review all documents before transferring any money. The extra $1-2k in legal fees could save you from a total loss on your investment.
For your tax prep business, I'd recommend Chase Business Complete Banking. Monthly fee is waived if you maintain $2000 balance which is doable for most small businesses. They have decent online tools and you can deposit checks remotely which is super convenient during tax season when you're swamped.
Do you know if they offer any sort of discount or special features for seasonal businesses? Since tax prep has that huge Jan-April rush and then slower periods.
They don't have specific seasonal business features that I know of. But their transaction limits are fairly generous which handles the busy season well. During slower months, you can easily maintain the minimum balance to avoid fees since you're not drawing as much from the account. The mobile app is also really good for depositing client checks which saves tons of time during the busy season when you can't step away to visit a branch.
Everyone's talking banks but no one mentioned Square or PayPal business accounts? I run a small tax biz and like 80% of my clients pay electronically now. Square has a free business account with no minimums and their processing fees are reasonable. They even give you a business debit card.
Square's great but their transaction fees add up. 2.9% + $0.30 per transaction means you're losing like $3-4 on each $100 payment. Better to encourage direct bank transfers or checks.
19 Everyone keeps mentioning Schedule C, but don't forget about tracking your business expenses carefully throughout the year! I learned this the hard way with my consulting LLC. Keep receipts for EVERYTHING business-related: office supplies, software subscriptions, business travel, client meals, professional development, etc. Also track business mileage if you use your personal vehicle. You'll thank yourself when tax time comes!
23 Do you use any specific apps to track expenses? I've been just keeping physical receipts in a shoebox and I know there's got to be a better way lol.
19 I use QuickBooks Self-Employed and it's been a lifesaver. You can link your business accounts and credit cards, then just swipe right or left to categorize transactions as business or personal. It also has a mileage tracker that runs in the background on your phone. Another good option is Expensify if you don't need full accounting software. Wave is a free alternative that a lot of people like too. Anything is better than the shoebox method! I missed so many deductions my first year because receipts got lost or I forgot what expenses were for.
5 Just a heads-up that you'll likely need to make quarterly estimated tax payments as a sole proprietor LLC. This caught me by surprise my first year in business. The IRS generally expects you to pay taxes throughout the year, not just at filing time. You can use Form 1040-ES to calculate and submit these payments. I got hit with penalties my first year because I didn't know about this requirement.
8 Do you know what the threshold is for when you need to make quarterly payments? Like is there a minimum amount you need to earn?
Ezra Bates
Another content creator here! Something nobody mentioned yet - if you're making under $400 net profit for the year from your content creation, you don't owe self-employment tax (though you still report the income). This surprised me when I started out. Also, if your main job already has you close to the Social Security tax limit ($160,200 for 2025), the math changes significantly on what you need to save. My accountant helped me realize I was saving way too much once I hit that threshold at my day job.
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Ana ErdoΔan
β’Wait what? I thought ANY side income got hit with self-employment tax! Are you sure about the $400 thing?
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Ezra Bates
β’Yep, 100% sure about the $400 threshold for self-employment tax. It's directly from the IRS rules. If your net earnings from self-employment are less than $400, you don't have to pay the SE tax, though you still report the income on your tax return for income tax purposes. Most new content creators don't realize this and end up saving way too much when they're just starting out. Of course, most people who stick with it eventually earn more than $400 in profit annually, but it's good to know the actual threshold.
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Sophia Carson
Just my two cents - I've been creating content for 2 years now and the biggest mistake I made was not separating my business and personal finances from day 1. Get a separate bank account (doesn't have to be a business account) where you deposit all your platform earnings and pay for expenses. Then I automatically transfer 35% of each deposit into a "tax savings" account. At the end of the year, I usually have more saved than I need for taxes, but that's way better than coming up short!
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Elijah Knight
β’This is solid advice. I started doing this after my first year and it made a HUGE difference. My question is do you do quarterly estimated payments or just save it all for April?
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