Gaurav Pandey

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The Confused New Business Owner’s Guide to Taxes

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See on Scoop.itSmall Business Builder

Excerpted from the article: 


“This is Just the Beginning

An independent business owner has to become comfortable with doing taxes (or hire a professional if you can afford it). The reason why is because taxes are half your life now. Not only do you have to do your own federal taxes in April, you also have to contend with quarterly estimated taxes every few months. You may even have to contend with sales tax depending on certain circumstances. If you don’t get used to dealing with these taxes, they will drive you insane.

You Should Save Everything

Every piece of paperwork you encounter with your business will come back to life at some point. Whether it’s an invoice, receipt, or a tax form, you will see it again. It’s best to go ahead and start saving everything just in case.

Even better, start a filing system so you can find what you need when you need it. Store all invoices together in one place and receipts in another so they don’t get mixed up. Converting them to a digital format may be the best idea as they will be easy to store and move around. (Don’t worry – the IRS accept digital receipts should there ever be a question about a tax deduction.)

Your Life is Expensive

As a wage or salary worker you’re a little protected from how much money is actually moved through taxes owed. However, as an independent business owner you’ll suddenly find out just how expensive it is.

For example, Medicare and FICA taxes must be taken care of solely by you. Before, they were split between you and the employer, and the employer sent everything in. Now, though, you calculate the amount you owe on Schedule SE which transfers over to the Schedule C for your business. This means less money in your hand – and that’s just one example.

Mistakes Can Be Fixed

Most people think of the IRS as an evil entity sworn to destroy your life forever, but in fact it’s just made up of people. Those people understand nobody is perfect and that they make mistakes from time to time. This is exactly why tax forms like the 1099X exist. It’s a form that lets you fix mistakes you made on your 1040 forms.

Look, you’ll make mistakes, and it will seem like the end of the world. However, it’s not, and you shouldn’t treat it as such. The IRS even lets you file entire years you missed, so they’re obviously not trying to destroy your life. Just remain calm and fix the issue. That being said, its way less stressful to get it right the first time”

Gaurav Pandey‘s insight:

Taxes suck. Hope this helps. 

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