You’ve set up your LLC, you’re running an established business, and things are moving along, but are your financial habits actually helping you grow and is your LLC protecting you the way you think it is?
In this episode, Danielle Hayden, reformed corporate CFO and CEO of Kickstart Accounting, Inc., breaks down the five hidden mistakes that hold LLC owners back and shows you how to build the right habits to protect your business, pay yourself confidently, and prepare to scale into an S Corp when the time is right.
Key Takeaways:
- Separate Your Business and Personal Finances: Mixing personal and business expenses can “pierce the corporate veil” and undo your legal protections. Keeping everything separate not only protects your assets, it also keeps your books clean and your numbers clear.
- Pay Yourself Intentionally with Owner’s Draws: If you’re not paying yourself regularly, it’s easy to dip into business funds without realizing it. Taking consistent draws helps you stay disciplined and sets the foundation for switching to payroll when you become an S Corp.
- Save for Taxes Every Single Month: You pay taxes on your profits, not just what you take home. Setting aside 25–30% of your net income for taxes keeps you from being blindsided at tax time.
- Review Your Numbers Monthly: If you’re not looking at your profit, cash flow, and expenses every month, you’re running blind. Regular reviews help you catch errors, make smart decisions, and identify when it’s time to level up to S Corp status.
- Keep Educating Yourself: Knowledge is power—and profit. Understanding deductions, tax rules, and best practices can save you thousands and help you confidently step into your CEO role.
Topics Discussed:
(00:00) Intro: What an LLC Is and Why It Matters for Your Taxes
(02:32) Mistake 1: Co-Mingling Business and Personal Funds
(03:40) Mistake 2: Not Taking Owner’s Draws
(03:24) Mistake 3: Not Saving for Taxes
(05:16) Promo Break: Kickstart’s “Check Your Books” Service
(07:34) Mistake 4: Ignoring Your Numbers or Not Regularly Reviewing Financials
(08:29) Deciding When to Elect for S Corp Status
(09:04) Mistake 5: Not Educating Yourself
(09:55) Real Life Client Success Story
(11:12) Action Step: Audit Your Current Habits
(11:47) Outro: Like, Share and Subscribe!
Related Episodes:
YouTube Playlist | Small Business Tax Tips: Deductions, Entity Types, 1099s, & IRS Strategies
Ep. 189 – LLC vs. S Corp: Which Is Right for Your Business?
Ep. 115 – Entrepreneurs: Should You Go S Corp? Pros & Cons + Expert Insight
Resources:
Check Your Books | kickstartaccountinginc.com/checkyourbooks
Book a Call with Kickstart Accounting, Inc.:
https://kickstartaccountinginc.com/book-a-call/
Connect with Kickstart Accounting, Inc.:
Instagram | https://www.instagram.com/Kickstartaccounting
YouTube | https://www.youtube.com/@businessbythebooks
Facebook | https://www.facebook.com/kickstartaccountinginc
Episode Transcript
00;00;00;00 - 00;00;27;29
Danielle Hayden
You've already set up your LLC and you're running an established business, but here's the truth: if you're co-mingling funds, skipping owner draws or ignoring your numbers, your LLC isn't protecting you the way you think it is, and those same habits will keep you from scaling into the next stage, like becoming an S Corp when the time comes. In this episode, I'll walk you through the five biggest mistakes I see LLC owners make and how you can avoid them so you can protect yourself,
00;00;28;04 - 00;00;33;28
Danielle Hayden
pay yourself the right way, and prepare your business for future growth.
00;00;34;00 - 00;00;58;03
Danielle Hayden
You're listening to Business by The Books, the podcast that helps you understand your numbers so you can run a stronger, more profitable business. I'm Danielle Hayden, CEO of Kickstart Accounting, Inc., and I've helped thousands of LLC owners clean up these mistakes and set up stronger financial habits for growth. Here's what we'll cover today: what an LLC really is and why it matters for your taxes,
00;00;58;06 - 00;01;19;02
Danielle Hayden
the five mistakes that trip up LLC business owners, and what actions you can take today to prepare for the next stage of growth. Let's start with the basics. An LLC, it's really just a legal structure. So I want to be clear, I'm not an attorney, however, as a business owner, it's really important to understand what an LLC is
00;01;19;09 - 00;01;50;12
Danielle Hayden
and how it impacts your taxes and the way that you run your business. Now, this legal structure, the LLC, this is what separates you from your business and it protects your personal assets. From a tax perspective, though, an LLC is just a pass through entity. That means all of your business profits they pass through. They pass through to your personal tax return, and you are going to pay self-employment tax on those profits.
00;01;50;13 - 00;02;17;16
Danielle Hayden
Now, I want to be clear, as an LLC, you are paying taxes on the net income of your business, not gross sales. It’s sales minus cost of goods sold minus operating expenses. Those net income dollars, that is what you're going to pay taxes on, and you're paying both the self-employment and income tax on those profits. And that's why having good financial habits as an LLC is so important.
00;02;17;19 - 00;02;42;10
Danielle Hayden
I want you to understand how to pay yourself, how to track expenses and save for taxes so that you can be ready to become an S Corp when the time is right for your business. All right, let's jump right in. What are the five mistakes? Mistake number one is co-mingling your business and personal expenses. Mixing personal and business expenses does a few things from a legal perspective.
00;02;42;11 - 00;03;07;03
Danielle Hayden
This is what we call piercing the corporate veil. You cannot co-mingle expenses and then if somebody comes after your business, expect them not to come after your personal assets. You've already pierced the corporate veil. You've already brought in your personal finances into your business. And so from a legal perspective, we need to keep our personal and business money completely separate.
00;03;07;06 - 00;03;29;24
Danielle Hayden
It also creates bookkeeping headaches. We had a client who came to us a few years ago, and she was desperate to understand why she was paying so much in taxes, but had no cash in her business. After we did what we call a catch up, we brought all her transactions in for the year. What we noticed was that she was co-mingling business and personal expenses.
00;03;29;27 - 00;04;01;15
Danielle Hayden
So although the business was profitable, her personal expenses were slowly leaking the profit out of the business, and she couldn't really tell the health of the business. All right, mistake number two is not taking owner's draws. If you are not paying yourself intentionally, it is too easy to dip into business funds. So what we see with our clients at Kickstart Accounting is that our clients who are not good about actually taking owner’s draws, they're the ones that have the hardest time not co-mingling expenses.
00;04;01;16 - 00;04;23;13
Danielle Hayden
And look, I get it. I'm not saying as a business owner you shouldn't have any personal spending. I want you to spend money personally. I want you to have the life of your dreams. However, it's important that we're taking those dollars, moving them from your business account to your personal account as an owner’s draw. This is going to help you keep co-mingling
00;04;23;13 - 00;04;46;21
Danielle Hayden
at a minimum. The discipline of taking draws is also going to prepare you to transition into payroll when you do elect for S Corp status. Again, my goal here is to help you create a healthy, sustainable, profitable business and that includes growth. And so I want these mistakes to help set you up for success in the future as your business grows.
00;04;46;24 - 00;05;16;24
Danielle Hayden
And when the time is right, that is going to include S Corp status. S Corp status requires you to pay yourself a reasonable compensation, which means you need the discipline of paying yourself regular draws. It's like going on a diet on Monday, you guys, we’re not going to randomly start sticking to it once we become an S Corp. Stop co-mingling expenses now and start taking owner’s draws so that you are ready to take the next step in your business.
00;05;16;27 - 00;05;41;16
Danielle Hayden
Yes, you need accurate bookkeeping to file taxes or apply for that loan, but honestly, that's not the real reason. The real reason is because bad bookkeeping, it's hiding all of your problems. At Kickstart Accounting, we've seen it all; doubled income, missing expenses, and air quotes “healthy looking QuickBooks dashboards” that are just masking financial chaos. QuickBooks and AI tools,
00;05;41;17 - 00;06;08;03
Danielle Hayden
they won't tell you when your data is wrong. They just make it look pretty. That's why we created the Check Your Books service. Our team of real human experts run a 25-point accuracy review of your QuickBooks, checking every transaction, every reconciliation, and every balance sheet line. Then we record a personalized video walkthrough so you know exactly what's right, what's wrong, and how healthy your books really are.
00;06;08;05 - 00;06;29;00
Danielle Hayden
No more guessing. No more pretending everything's fine. It's human to human, walking you through the truth about your business. Now, if you're ready for this, go to KickstartAccountingInc.com/CheckYourBooks. We'll get started today so that you can step into your role as CEO with confidence.
00;06;29;03 - 00;06;51;23
Danielle Hayden
Mistake number three is not saving enough for taxes. As an LLC, you pay self-employment tax on your profits, not what you take home. Taking owner's draws as an LLC is like going to the cash ATM of your business. Honestly, you can take as much as your business can afford, however, you're going to be paying self-employment tax on those profits.
00;06;51;25 - 00;07;16;27
Danielle Hayden
So if you are not setting aside money monthly, you're always going to feel blindsided by tax season. Tax season, especially as a business owner, it's no surprise, you guys. It's gonna keep happening every single year. It's time to take responsibility and get prepared. And that's why our clients at Kickstart Accounting, Inc., they receive their tax reserve in their Snapshot every single month.
00;07;16;29 - 00;07;37;25
Danielle Hayden
You should be looking at this number, not at the end of the quarter and not at the end of the year. You should be looking at your tax reserve every single month, and that includes between 25 and 30% of your net income, either paid into the IRS or set aside into a tax savings account. All right, mistake number four is not reviewing your numbers monthly.
00;07;37;26 - 00;07;58;04
Danielle Hayden
If you aren’t looking at your profit, cash flow and expenses every month, you're running blind. Reviewing your numbers is a habit that helps you make those smart business decisions. And as an S Corp you are required to have a balance sheet, which means you need to have accurate bookkeeping. Now, there's a few ways that we can review our numbers,
00;07;58;11 - 00;08;24;16
Danielle Hayden
as a business owner. There is for accuracy and completeness, especially if you're working with a money team. Make sure you're looking at your financial statements to double check if anything's changed. Did you communicate that new credit card? How about the car that you just purchased in your business's name? Make sure that you're reviewing that balance sheet and your financial statements to double check that everything has been communicated and included from your money team in your financials.
00;08;24;18 - 00;08;48;04
Danielle Hayden
So first we're looking for accuracy and completeness. Then we're reviewing our numbers. As a CEO, what are the stories our numbers are telling us and what decisions do we need to make? And this includes becoming an S Corp because once your business is making about $75,000 a year of net income for two years, it's time to consider becoming an S Corp. Again,
00;08;48;04 - 00;09;15;04
Danielle Hayden
we are preparing our businesses for growth in the future and if you are not reviewing your numbers, you're always going to be reactionary. So review your numbers. If you have profit of over $75,000 for more than two years, it's time to look at S Corp status. Number five is not educating yourself, because there is so much. We have recorded 260 episodes because there is a lot to say here.
00;09;15;12 - 00;09;36;16
Danielle Hayden
There is so much information for you as a business owner, and you need to be educated on mileage, home, office and what expenses are a business expense. Education can help you save thousands of dollars and it can help you think like a CEO. Now, I know you've made it to this point in the podcast, so you are taking control and educating yourself.
00;09;36;16 - 00;10;00;20
Danielle Hayden
I'm going to link in the show notes our favorite tax episodes like mileage, meals, home office, and the top deductions that every business needs to know so that you can continue to educate yourself and be taking all of the deductions that you possibly can as an LLC. I'll never forget one of our clients who came to us a few years ago, and she was running her LLC.
00;10;00;23 - 00;10;27;22
Danielle Hayden
She paid herself sporadically. I would say once every six months. She wasn't great about responding to our emails or looking at her numbers. But as her business started to take off, she committed to build new habits, and during this time she recommitted to separating her business and personal accounts. She met with us monthly, so she knew exactly how much to take in owner’s drawers and to save for taxes.
00;10;27;25 - 00;10;53;24
Danielle Hayden
When she reviewed her numbers each month, she reviewed them for both accuracy and to step into her role as a CEO. We monitored it closely and celebrated together when she hit her second year of six figures of net income. She was ready. She already had clean books. She had been taking out a consistent owner's drawers, and she had strong habits.
00;10;53;26 - 00;11;21;02
Danielle Hayden
So transitioning into an S Corp was simple, and she was able to save thousands on taxes. That very first year, her dedication to these simple, consistent habits allowed her to save, allowed her to step into her role as a CEO. So here's your action step. I want you to audit your current habits. Which of these five steps are showing up in your business today?
00;11;21;04 - 00;11;47;26
Danielle Hayden
Fixing them now doesn't just protect you, but it protects the future of your business. Now in the next episode, I'm going to break down for you the pros and cons of being an S Corp and exactly how to do it. You're going to see how these habits prepare you and your business to take the next step with confidence. I hope you enjoyed today's episode of Business by The Books.
00;11;47;28 - 00;12;29;17
Danielle Hayden
Don't forget to hit like and subscribe! This is the number one way we can help other entrepreneurs find this podcast because here at Kickstart Accounting, Inc., it is our mission to help entrepreneurs understand their numbers, get access to this information, and grow and thrive in their business. So please help me, help other entrepreneurs understand their numbers so they can finally grow and thrive!