I can see you rolling your eyes already.
The leaves are barely changing…it’s not even close to the end of the year so WHY?
Why am I insisting that you even think about tax time now?
Sooner Really Is Better!
I can hear you. You’re all, “Joyce, what the hell are you talking about? Seriously, it’s barely October!”
But give me a moment. Hear me out.
Sooner really is better for a lot of things.
A lot of things, like…launches, budgeting, marketing and TAX PLANNING!
Planning…of the Tax Kind
So, you’ve been so into building your business and making the moolah that you forgot something.
You forgot about Mr. Tax Man.
The worst thing you can do is completely ignore his pleas to pay attention to him.
He’s kinda needy that way…so give him some love.
Tax Planning – Part 1: Estimated Taxes
Estimated taxes is basically when you prepay what you might owe based on what your earned income is as a self-employed person/business owner.
If you haven’t done so yet this year, have a chat with your tax preparer.
You might already know this but ask them if you owed anything last year and if you should be paying estimated taxes.
If you should be paying them, check out ESTIMATED TAX FORM.
Tax Planning – Part 2: Estimated Taxes (Contingency Plan)
In the event that you technically didn’t owe anything last year (or if it is your first year of business), and you don’t have to pay estimated taxes… my piece of mind/just in case number is 30%.
Even if you do pay the quarterly estimated taxes… this is a good step to take to put aside the funds you need monthly.
Setup a separate bank account. A savings account is fine.
Each MONTH, put aside the “tax money”.
This is what I consider a “piece of mind” account.
Do you HAVE to take this extra step? Not really…but knowing that you’ve saved and set money aside for when the time comes is a great step to help you sleep at night.
Because seriously, if your business is successful and making money… the time WILL come when you’ll have to pay taxes.
Tax Planning – Part 3: BOLO Alert
BOLO… Be On the Look Out.
Obviously, I watch way too many cop dramas on TV… but anyway, be on the look out for your tax stuff.
As it gets closer to the end of the year, start making a list of all the tax stuff you’ll need (this is another thing that you can ask your tax preparer about when you chat with them).
It’s a lot easier to make this list now…when you don’t have a ton of other things on your mind.
Tax Planning – Part 4: Changes
Another handy-dandy list.
Make a list of things that have changed in your life since last year.
Have you gotten married or divorced? Have you had children?
Have you purchased a new house? Or sold your house? Or refinanced your mortgage?
Have you started your business? Gotten an office? Have you increased your business income?
There are a ton of other questions I could list but you get the picture.
Make a list of the life & business changes that have happened this year.
So why do I think it’s important to take care of this sooner than later?
Because it’s a lot easier to take care of this when you (a) have a bit of a time runway and (b) you aren’t under the pressure of either the end of the year or tax time.
Have questions or suggestions? Drop them in the comments!
Until next time,