I thought all of my life’s problems would be over once I started making money. I was in my early 20’s making tens of thousands of dollars a month. Life was good. Or so I thought.
I didn’t understand taxes at all, but I figured the money was coming in, so the rest of the stuff would work itself out, right? Not really.
I paid the price for that naivete in the form of interest, penalties and a host of other financial headaches I’d rather not be reminded of. So, don’t neglect or put off your taxes like I did. It won’t work itself out. You’ve got be proactive.
There’s money and time involved in doing taxes. One in three companies spend forty+ hours a year doing federal taxes, as per a 2018 NSBA Tax Survey. And it gets worse. “Fifteen % of those companies spend more than $10,000 a yr to complete their taxes while forty one % of small businesses spend lower than $10,000 on advertising annually,” in accordance with Gusto.
As an editor over at Cautious Cents, we have covered the perfect tax software for small companies in-depth, as well as learn how to keep away from an enormous tax bill once you’re self-employed. However I felt compelled to share the broader strokes of my research right here, with the broader entrepreneurial group, so you do not end up in the identical sinking boat I used to be in. Like virtually all issues in life, greatest to get ahead of them before they metastasize.
And full disclosure: I am not a tax professional nor am I pretending to be one. I am just someone who’s learned a lot of this difficult manner and hope, after studying this, you won’t have to.
First, two simple tax tips, then we’ll get to the software program itself.
Use a Separate Account to Pay Taxes.
This is likely one of the simplest choices you may make in what you are promoting life — setup a separate tax savings account. For most banks, when you have a checking account already, you possibly can simply call and open a savings account up over the phone.
As a small enterprise proprietor or freelancer, I get it, it’s nice to have the whole lot draw from one account. But when it’s time to sift by way of and tally the whole lot up come tax time, things can get messy. Spare your self the headache. Make estimated tax payments straight from a separate account.
And here’s learn how to make that even easier.
Use Apps to Automate Tax Savings.
This is one other a kind of easy selections you’ll be kicking your self for not having thought of sooner. Use apps like Digit or Acorns, you can setup up recurring withdrawals weekly, bi-weekly or everytime you get paid. And these recurring withdrawals ought to go straight to your tax financial savings account. Identify all of the accounts something easy (i.e., “income tax”) so you are not scrambling every April or each quarter.
Now onto the software aspect of things.
Best Tax Software for Freelancers.
In case you file a Schedule C or 1040, TaxSlayer is a superb option. There’s a few causes TaxSlayer is the best tax software for freelancers, in my opinion. Not like TurboTax — and extra on them in a bit — you do not have to pay $200 for all of your filings or pay additional cash for support.
The performance is comparable, but it’s simply $47 on the federal stage, an extra $29 on the state tax submitting, and so they have representatives out there 24/7 to walk you thru questions, via cellphone, email or reside chat. Customer support is the place they really shine, considering that, as a freelancer, taxes are often the last thing on your mind — till it is time to do them, not less than! However if you’re disciplined about adhering to these first two ideas above, and use a service like this, you won’t have anything to scramble about.
Best Tax Software for Small Businesses.
TurboTax was started in 2001, eons in the past in web years — who remembers shopping for the these TurboTax CDs? Though TurboTax Enterprise is perhaps overkill for an unbiased freelancer, it’s an excellent possibility for a rising small business.
As an illustration, if you happen to use QuickBooks, Intuit lets you import all of that knowledge directly. You can even TurboTax Enterprise to manage taxes for LLCs, C-companies, S-corporations, estates and different firm structures.
Whereas many of the so-known as “best tax software program for small businesses” concentrate on submitting by April 15, with TurboTax Business you may file quarterly, pay estimated taxes and even submit returns to particular person states where you could owe.
The most important downside with this? Cost. It’s $169.99 and you must pay $24.ninety nine for each state tax return you file, plus, do you have to require a tax skilled to assist, you’ll must fork up an additional payment. But given how sturdy the software program suite is, it may be well worth the cost.