February 24, 2014

Monday Memoirs: Death and Taxes

I did it! I finally did it! 

I filed our taxes. 

Holy crap. Taxes can be a pain to file as it is, but throw in a business and you're in a whole different ball game in a completely crazy league. To top that off, I found out the hard way that the day job hadn't been taking federal taxes out of my paycheck all year. Lovely. That'll teach me to check my pay stub, huh?

Any way you cut it, it was less than a pleasant experience. However, in the very least, it was an excellent learning experience. I learned all about what expenses I can write off and which deductions I can take. I've even calculated how much estimated quarterly tax to pay for this year.

While it may have been less frustrating to take my 50 million papers to a tax professional, it was worth it to learn. With that knowledge, I can make better business decisions and really choose where my money goes. 

From an Etsy shop/small business owner who has conquered her taxes (and a migraine or two), here are some tips and helpful resources:

Keep all of your receipts. No matter how little or much it is. Also, don't forget those receipts you get via the Internet like where you paid online to ship that package! Lastly, order them chronologically.

Keep a record of your mileage. You get ~56 cents for every business-related mile traveled. 

Keep a record of your profit and expenses. I do this on a monthly basis. Do what works best for your business. At the end of every week, I fill out my profit and expense sheet until the month is over. Then, I take it and my receipts and file them away.

Find Your Closing Papers. Figure out the square footage of your office in your home and the total square footage of your home. Write it off!

Don't wait until the last minute. <--- especially if this is your first time! I definitely allowed myself plenty of time to get our taxes filed. There is no way of sugar-coating it - taxes suck! I'd work on them a little at a time. When I would start getting frustrated, I knew it was time to put it down. I quickly learned that working frustrated just led to careless mistakes which only get you more frustrated. 

Lastly, educate yourself. Taxes are not sexy, but knowledge is. I read a lot about small business taxes and write offs once I dove in. I wish I had done it before I started, because I would've understood more. 

Here are some superb resources to help:

Organize Small Business Taxes (with free printables)

Good luck!

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