Doing your taxes can be one of the most painful parts of the business year. This is especially true if you are a stretched-for-time freelancer or run a company that has a lot of diverse and complicated elements. Nonetheless, it is an obligatory part of our lives, with refusing to pay your taxes potentially having terrible consequences for you and your business. In order to avoid this nasty end, this guide has been created to try and make sorting out your taxes as simple and stress-free as possible.
Be Aware of Your Deadlines
A lot of problems can arise if you don’t meet your deadlines. For example, you might be subject to late payment fees, which can be quite costly, or even an audit, which might harm your business. In the USA, the deadline for federal tax is April, 15, with the tax filing start date pushed to February 12, but state tax can differ depending on where you live. This is why that it’s essential to be well aware of the different tax deadlines well in advance so you can make a dedicated plan and make sure that you don’t get stung by submitting after the deadline.
Hire a Professional
If your taxes are too complex or you are afraid of putting in the wrong information, then it makes a whole lot of sense to simply hire a tax accountant to do the hard work for you. These people are specially trained in the ins and outs of tax law, making them the most suitable people to sort through your every need. Additionally, while they will cost you in initial fees, it is likely that you will save money when doing your tax return as they will be able to identify ways to save by claiming certain expenses on taxes and figuring out which payments might be deductible. The biggest issue that they will help you with is avoiding costly mistakes, such as missing out on a $3,000 refund! For a solid accounting option, Plummer Parsons can help you with your every need.
Track Your Income Each Month
Whether you use a professional or not, your taxes will be a massive headache if you don’t track your income properly. It might sound like a lot of effort, but actually, it’s quite simple. Simply open up either Excel or Google sheets and create new tabs each month. Then when you either send an invoice or receive payment, put the amount of money in. That way, you will be able to easily calculate your income month on month, a declaration that is essential if you want to get into the correct tax bracket. If you need to calculate this and are not sure where to start, it’s good to consult previous invoices and pay-stubs. Talking of this:
Keep All Invoices and Pay-stubs
Unless you are working on one-off projects and are not really a freelancer or a business, then it is absolutely essential that you keep either all your invoices or pay-stubs as this is probably a legal requirement where you live. This makes your life a whole lot easier, as if you haven’t even properly calculated your taxes yet, you can always simply go to an accountant with your invoices and just ask them to try and make sense of them. While at first, sending an invoice might sound a little scary, this is an essential process as a business or freelancer and something that will help you feel and act like a professional in no time.
Keep Your Old Tax Returns
It’s great to have a record of all your old tax returns so you can be sure that you are completely aware of how your business or solo activities are doing over time. Not only this, but the IRS has the right to audit your business over the past three years, so it’s very important that you have the necessary receipts in order to avoid getting yourself into any problems.
Make Sure You Don’t Miss Anything
No matter how much you might think that you’re finished with your tax return, it’s important not to be complacent and to double-check for any mistakes. It’s essential that any issues such as the 80% of Americans who fill in this part of their forms wrong do not arise. Go over your returns with a fine eye for detail, either by yourself and your accountant, and it’s likely that these mistakes will be as minimal as possible.