Calling on all the budding entrepreneurs out there! Here’s to you – the self-employed, the self-made, the pioneers of the business world! People who pour their blood, sweat, and funds into starting their own business. We know how hard it can be to line up all your ducks just right and how rewarding it is when you get it right!
However, as they say – the battle has just begun. There are various factors that you need to take care of once your company takes off. Managing a company can be a much more stressful and overwhelming job than starting one. Also, it can be really confusing trying to fit in the host of advice and pointers you might receive from everyone around. With the tax season in full swing, the least we can do is at least take care of this: a five-minute read to help you stay on top of your tax game throughout the year:
Write it down
Keeping well-maintained records for all your business transactions might seem like the most elementary of rules, however, it is of extreme importance. Often, new business owners end up with a drawer full of receipts from various vendors and agencies but no formal record of their expenditure. This can create havoc at the time of return filing.
Thus, it is of utmost importance that you maintain an efficient system of record keeping. This will save you unnecessary hassle down the line.
Working from home might just work out for you!
You might have heard scary bedtime stories about IRS conducting random audits for home offices. However, just like most urban legends, this also needs to be paid no heed.
People who regularly and exclusively use their homes to conduct managerial and administrative work for their business can claim a deduction for portions of their utilities, rent or mortgage interest, depreciation, and the likes of them. This will depend on the percentage of space you use for your home office.
You can even be eligible for the simplified home office deduction offered by IRS. This can amount up to $1500. The calculation is usually based on the standard amount of $5 offered per square feet of your home space used, up to 300 square feet.
Show them the money!
Once your company gets established, you might start seeing the 1099-MISC form from your contract work or even 1099-K forms to report your income. However, you might not actually receive a form to report your income. 1099-MISC is issued only in the case of your client paying $600 or more for your contractual or freelance work.
Similarly, 1099-K is issued when you accept payments through a third party vendor; have a reported number of 20 or more transactions, and make more than $20,000. Thus, keeping a proper record of your income is indispensable. Also, even if your income falls below the given set of criteria, you will be required to report all your income.
Plan your retirement
Yes, we know, you are young, ambitious and light years from that pesky retirement age. But starting a new business can be financially exhausting and leaves you with little or no scope for savings for quite some time. That being said, it is important to get your finances in order at the earliest. Once, the profits start pouring in, you need to streamline your retirement savings. This will not only prepare you better for the future but also make you eligible for various tax deductions in the present.
Pay attention to Estimated taxes
For people who’re managing their business along with a salaried job, a certain portion of their income is held back throughout the year to pay the estimated taxes. This is owing to “pay as you go” tax system of the IRS.
However, for the self-employed, these taxes are charged on a quarterly basis. This applies for all freelance, contractual, and self-employed workers who are expected to pay $1000 or more annual tax.
For the 2018 tax year, the estimated taxes are due by
- April 18, 2018
- June 15, 2018
- September 17, 2018
- January 15, 2019
These are a few pointers that can help you find your footing in the business world efficiently. For more tax-related information and guidance, you can contact MyTaxFiler by dropping a mail at email@example.com or call us at (888)-482-0279.