3/18/2015 0 Comments
By: Heather Hawkins
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April 15 is less than one month away, and if you're like many small business owners, freelancers, and consultants, you simply haven't had time to organize and prepare taxes. Whether you are a DIY tax preparer or choose to have someone else prepare your taxes, there are a few things you should know before you file.
1. Online Sales Taxes
Selling and purchasing goods on the internet once came with the added bonus of avoiding sales taxes. Times have changed, and now online merchants in many states are required to collect sales taxes. Failure to collect online sales taxes comes with different repercussions from state to state. Most states do actively try to find online retailers who aren't collecting sales taxes, though, and at the minimum, you'll be required to pay up. Here's a 50-State Guide to Internet Sales Tax if you'd like to learn about the regulations in your state.
2. Estimated Taxes
Did you know that you might be expected to pay quarterly taxes? Oh yes, believe me, I agree that once per year is quite enough! The system is advantageous, however, because it eliminates any nasty surprises in April. The IRS requires sole proprietors (which includes small business owners, partners, consultants, freelancers, professionals, etc.) to file estimated taxes if the company is expected to owe more than $1,000 at tax time. If you file as a corporation, that threshold drops to $500 in anticipated tax liability. Also, if you had any tax liability for the previous year, you might be required to file estimated taxes. You can learn more about the official IRS rules for filing estimated taxes here.
It's crucial that you keep records for the RIGHT amount of time. As a proprietor, you are able to deduct a lot of your expenses. If you are audited, and you've thrown away or misplaced your supporting documentation, you could end up owing money to the IRS. Avoid that circumstance by holding on to your supporting records. The IRS has some interesting criteria for keeping records, though. For instance, if you didn't file a tax return or filed a fraudulent tax return, the IRS wants you to keep your records forever....Dare I say most people fall into the categories that deem it sufficient to hold records for 3 years, while others will need to keep their docs for 4, 6, or 7 years. You can read all the IRS rules for keeping records here.
4. Home Office Deduction
This little gem is perhaps one of my favorites. As long as "home base" for your business is in your home, and your work has a dedicated spot in the house or a structure on your property, then you can use the home office deduction. Of course, it's a little more complex than that. I've touched base on the topic before, and TurboTax recently wrote a great guide for taking the home office deduction. Check it out and see if you're qualified!
5. Affordable Care Act
This is the first year that the ACA is affecting our taxes, so beware! As long as you had some sort of healthcare coverage throughout the year, there's nothing to worry about. Otherwise, you'll need a healthcare exemption to avoid making a penalty payment when it's time to file your taxes. You can read more about what the IRS says about the Affordable Care Act here.
I know how stressful tax time is for entrepreneurs. On top of your personal tax chaos *BOOM* you have to focus on a year's worth of invoices, cash flow, expenses, etc. My best advice: get organized and get it done! I recently filed my taxes...and all I can say is THANK GOODNESS IT'S DONE!! If you have tax questions about your business, feel free to message me. I completed a tax prep course with the only accredited tax prep school in the country, and I enjoy helping others with their taxes!
About the Author
Heather Hawkins is a top-rated copywriter who specializes in press releases, press release distribution, and web content creation. Her favorite things include enjoying her son and daughter grow up too fast, LSU football, fast cars, freedom, music, and living/laughing/loving in general. Connect with Heather on Google+, Facebook, Twitter, and LinkedIn.
About Heather Hawkins
Heather Hawkins is a professional copywriter with 4 years of PR, marketing, and entrepreneurial experience.
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