Tips for your Taxes
Ah! I can't believe my taxes are FINALLY done. I've been putting them off for so long. Obviously, they kind of HAD to be done by today, but still. They are done! It's over. And I am so thankful. I have another whole year before having to do it again.
Thank you to everyone who participated in the 'Tax Tuesday' give-a-way yesterday! It made my day so much more interesting while I had to sit at my desk and crunch numbers. Congratulations to Susie Marie and Jo H. for winning yesterday! I cannot wait to work with you on getting you your prizes. Be sure to email me at Johnna@TwilaCo.com to claim your prize!
Moving on to today's blog topic: Taxes! If you're like me, you really, really, really hate doing the finance/numbers part of your business...or even just life. While I took some accounting classes in college and can manage my way around, I put it off so long because it's always the last thing I want to do.
I'll be up front and honest from here, I am not an expert. Not even a little bit. All I'm sharing today are a few tips and resources I've learned the hard way from running a business. This blog is just some very basic information on where and how to find tax information and an overview on how I handle my taxes.
When I first started my business, I was lucky enough to have an AMAZING mentor who sat down with me and actually walked me through the entire process of how to start & register my business, get an EIN, and how to invoice/bill clients. I had tons of questions, and she was so happy to help. As a brander/designer, I work with a lot of people who are just starting out. Some people come to me and have NO idea where to start, and some people have already started. So I'm going to start from the beginning.
Register your Business
It helps with liability; it helps with separation of assets; it helps financially. I registered Twila & Co. as an LLC in the state of Virginia. And then I registered it with the IRS for my EIN (Employer Identification Number). It's made filing out any paperwork, especially taxes, much easier. It also makes it much easier to open business banking accounts. Resources on how and where to are below.
Not sure what type of Business you should run (Sole Proprietorship, LLC, Partnership, Corporation)? Check out this great article from the Small Business Administration that explains the differences.
U.S. Small Business Administration
Virginia: Register Your Business
Track your expenses and sales
This is the biggest tip I can give you: track your expenses all year long. I record mine on a monthly basis and reconcile my books each time. The sooner you record your expenses, the more you remember about that month. For example: I track my mileage, but sometimes forget where I go. It's much easier to remember the past month than it is to remember four months ago.
I personally use QuickBooks because I like how it works and I like being able to run reports as needed (expense reports, profits, net income, etc). At the end of the year, I run one report that has all of my sales, expenses and net profit and it's so easy to input that into tax forms. I have also heard that some people use Mint.com to track their expenses.
IRS Deducting Business Expenses
Estimating Your Quarterly Taxes
I prefer to pay my taxes on a quarterly basis as this helps with the chance of a refund instead of owing money. At the beginning of every year, the IRS and Spotsylvania County send me a little packet of vouchers to send in my taxes on a quarterly basis. You can request these forms and they mail them to you for free OR you can go to the IRS website or your state website and download them and print them off (I've included a few links below).
Not sure how much to estimate? The IRS 1040 Estimated Tax Publication tells what percentage you should estimate of your income based on your tax bracket for federal taxes.
State of Virginia Individual Estimated Tax Information
State of Virginia Withholding Tax
State of Virginia eForms for Withholding Tax
Easy Sites to File Your Taxes
There are SO MANY places you could file your taxes. I mean, endless. I use 1040.com because it is easy and cheap (they always have coupons!) even for small businesses. Some places have extra fees as a small business owner to file your taxes since it is not considered a 'simple' tax return. It doesn't hurt to double check your tax recordings with more than one site too. I double checked my information with TurboTax.com this year, but still filed with 1040.com.
I know taxes and finances can be a lot. I still stress out about it. Don't be afraid to ask for help! If I learned anything at Creative at Heart, it's that this industry has an amazing view: Community over Competition. We've all been there, and we're always happy to help!
