TAXES - I gotta do what now!
So you you made the leap from being employed by the man to being self-employed and well on your way to making your dreams come true. One thing you do not want to forget about is the change in your taxes.
I am self-employed and have been for many years, I also have had many employees over the years. So I know firsthand all the work that goes into keeping an organized tax filing system.
Now that you are self-employed the days of simply taking a piece of paper from your employer into H&R Block and having your taxes done is long gone. You will now have to prepare a tax strategy system that is not only going to keep you out of trouble with your government but also save you a lot of money and take advantage of some of the benefits of being a business owner.
I live in Canada so my tax laws are going to be different from those of you in other countries but if I can give one good piece of information it is to make a solid relationship with a good accounting firm that understands business tax and not just personal income tax.
Here are a couple of quick tips so that you do not end up with a huge tax bill at the end of the year.
- Set up a separate tax savings account. Talk to your accounting firm for help in how to set this up, but a good rule of thumb is to put away 15% to 20% of the income from any sources and put them into this account.
- Don't forget the deductions. As a business owner you are entitled to a lot of deductions such as your home office, car and fuel to name a few so take advantage of that. There are all kinds of guides on the Internet covering this topic and it might be a good idea to talk to your local accounting firm about what to watch out for.
- Make quarterly tax payments. This is a big one, if you want to keep the government off your back pay your taxes on time. Taxes are to be paid on income as it is earned, this essentially means that you're not supposed to only pay your taxes once a year. It hurt's to open your wallet four times a year and giving your hard earned money away but not having huge tax bill at the end of the year or facing penalties for not paying your taxes on time is definitely a plus.
- Keep track of all your expenses. With all the phone apps out there today this is really easy. There are a lot of apps that will capture and categorize every receipt that you get so when you hand them over to your bookkeeper or accountant it will be easy for them to keep your finances and books straight for your taxes and not miss any important deductions. Things like computer repairs, that new printer or office furniture are all tax-deductible but only if you keep the receipts.
I hope these tips help you, applying these strategies not only help you make more money but more importantly keep you out of trouble with the taxman. Working for yourself can be very rewarding but always have a plan, setting up your business for success is every bit as important or even more important than setting up your website for success.
Recent Comments
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Good reminder, thanks. It is so much easier to be organized from the beginning rather than try and catch up later. I have always taken this very seriously but it definitely takes work, focus and organization! Thanks, Joy
What you just pointed out is very important for anyone who decides to be self-employed or take the path of growing a passive income from IM. Choosing and appointing a decent accounting firm to handle the tax issue is essential to avoid getting into trouble from the taxman in the near future. Thanks for the sharing your concern. [Kelsey] .