Many freelancers and business owners have questions when it comes to their taxes. Who better to help you navigate the murky waters than Benita Tyler of TBSUSA Accounting? Check out Benita's tips below!
There is a lot of flexibility in business ownership. When to work, who to work with, and the type of work that you do are all great benefits. But even with the freedom to create the business of your dreams there is still a need for know-how. It is important to have insight in areas such as tax compliance and regulations to help you reduce your tax bill. Here's how E.S.P. helps you achieve great tax results in 3 simple steps!
E - Expense Classification
In addition to the opportunity to increase income you may have noticed another benefit of self-employment. If you are like others who start their own company then you likely realize the tax savings from writing off business expenses. This is an area that can be confusing when you do not understand where to draw the line. For example, if you work from home the Internal Revenue Service allows deductions for the business use of your home. In most cases there is only a certain percentage of the expense that qualify for the business deduction. Knowing what deductions are available to you makes the difference in how much you end up paying when you file your return. If you are unsure of what expenses to claim, speak with an accountant to get more advice.
S - Scheduling Payments
There are several types of taxes that may apply to you as a self-employed person. Examples include self-employment, income, sales, and payroll taxes. Depending on how your company is set up you may need to remit one or all of the taxes above. It is important that you understand the filing requirements from a federal, state, and local level. Get a tax calendar to track the schedule for filing forms and sending in payments. Failure to do so can lead to hefty tax penalties which means fewer tax savings for you.
P - Procedures and Payments
Another pitfall that is common to self-employment is overpaying income and self-employment taxes. Planning and good math are keys to successfully reducing taxes. A simple improvement that can make a big difference in how much tax you pay is putting the right financial procedures in place. The more thorough you are in tracking your financial activity the better off you will be when it comes time to file your taxes. This way you are not over reporting income or under reporting expenses.
It is important to be familiar with the tax rules that govern self-employment. Using this simple model will keep you in compliance and help you lower your tax bill
More questions? Contact:
Benita Tyler
Phone: (888) 380-1112
Phone: (888) 380-1112
Nationwide Tax and Accounting Services Available
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