February 6, 2020
All entrepreneur/business owners are feeling this time of year – tax season! Tax season can be a fairly difficult time for business owners/entrepreneurs. This is due to the fact that the end of year books need to be closed and final things accounted for. Now, for most, tax preparation nor taxes are a fun conversation to have or even deal with. Most of us would like to just skip over it, but as business owners, it really is our duty. It’s our duty to our business and ourselves to be good stewards of our money and follow the system.
So normally we share all about pretty weddings, gorgeous engagements and a little glimpse into our personal lives – well today we are going one hundred percent business. We are sharing tax preparation tips every entrepreneur should know!
Don’t go it alone:
This could not be truer to say – don’t try be a master at something that isn’t your strength! We are decent with simple numbers, but accounting is way off our charts. We hired an accountant, but this year made the investment to have us a CFO as well and wow. Truly, they know their stuff and the amount of money spent on them will be worth the time/frustration saved!
We also highly recommend getting a CPA to file your taxes. A CPA knows the current allowance and deductions that are allowed. They can answer many questions you may have in regard to your business. Also if you are ever audited a CPA has signed your tax form so they will sit through the audit with you!
Hiring employees vs. hiring subcontractors:
One of the biggest things that can hurt your business and your business taxes is this subject right here! When bringing on a new person into your business, you have to know what category they fall under because it changes everything! We found this article to help you understand the difference between the two.
“A freelancer does 99% of the work when it comes to their taxes. They have to pay quarterly estimated taxes, file their own taxes in April, and keep their own books. They receive a 1099-MISC tax form from each client in January or early February. Employees, on the other hand, get most of the work done by you as a business owner. You send their information into the IRS, you pay part of their tax burden, and send them a W-2 tax form helping them figure out their tax obligation for April.” –Funding Gates
Keep your accounts separate: Don’t mingle business and personal expenses.
Whew. This is where a lot of business owners get into the most trouble. We truly believe that we can have it on the same account AND keep it separate, but that is not the case. Things will get muddles and confused, especially if you don’t take care of it right away. The best piece of advice that we can give is to get your own business account and ONLY charge business items on that account. Plus you can always link the next tip to this account so that is strictly business and kept away from your personal account(s).
Get on a Payroll System:
We cannot tell you enough positive things about our payroll system. Getting on it and having state/federal taxes taken out is glorious!!
As a business owner, this is apart of your entrepreneur duties.
Let’s have a real chat entrepreneurs/small business owners – it is your duty to do this. When you signed up to make your passion project your job, you took on the responsibility of owning a business. Taxes are a part of that. We know its not the fun or the pretty or the IG worthy post, but it does mean a lot to your business. If you don’t know where to start, ask vendors in the same industry as you for recommendations!
Comment below if you have any tax preparation tips that you love to use!
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