Are there any Small Business owners or people that work out of their homes? What are some things you can help me prepare for as we start digging into our taxes? We made an account just to put back the expected amount we would have to pay in taxes and we hired a professional CPA. But what does that all really mean for us? What are some tips or tricks or advice you can give me?
This info may be too basic for you, but they're things I learned in the beginning. Your CPA should advise you what items are deductible for business purposes, some of these may have changed over the years. I'm assuming you saved your documentation. That was the biggest surprise when I started freelancing. Professional organisation fees, subscriptions to professional publications, training seminars, office space in my home, and of course tools, were all deductible. If you entertain clients or need specific types of clothing, those had their own write off. Some locations require professional licenses, some charge additional taxes for self employed people if you live in a certain locale or you do business in a certain locale. That adds up. You're probably also aware you're to file estimated quarterly taxes, not just end of year like salaried folk. The tax estimate is based on your yearly income divided by 4. If you correctly figure 90% or more of your income, you aren't penalized, but if you pay on less, you are. //It's great you set aside your tax monies ahead of time, setting aside a 1/3 or more of your income for tax purposes is a blow when transitioning from salaried to self-employed, paying the "employer" half of social security as well.
To remember that the IRS does accept "digital copies"... So scanning receipts and documents to easily find in a years time, when needed, should be flawless... hope this helps :-)
Oh, sorry, meant to add. Make sure you account for EVERYTHING you’ve spent on business and back it up with proof of receipts. Scan them, make a digital file.
I’ve personally owned a s-corporation, a c-corporation and several sole proprietorships and a few partnerships.
The BEST advice I can give you is this. Having good professionals doing what your CPA does, (lawyers,etc) is a fantastic support team. Do not let that keep you out of the “numbers”. Let them be a support team and do not rely on them to to just “do it all” and give you reports and returns.
Learn as much as you can. If your accountant or CPA or anyone will not take the time to walk you thru it (I’m not saying to take over or do their job) FIND someone else.
Even if you don’t understand and numbers aren’t your thing - it’s one of the most crucial aspects of your business. It can be excruciating and boring and time consuming- but so, so worth it!
Done with my soapbox :-)
Good luck in your business
I used H & R for a couple of years and found there customer service awful. I had a loss carryover and they did not have my prior year which I needed. Zero help over the phone. Turbo Tax has been wonderful. Done right the first time and no need to ask questions.