We all grew up thinking that taxes are complicated and that an expert was needed to calculate them. Or we thought that by merely making a mistake, the IRS would take everything we had and throw us in jail.
Refusing to pay taxes can still land you in the slammer. You could also end up in legal trouble if you cheat or knowingly defraud the government. You won’t, however, go to jail if you make a simple math error that cannot be corrected. And the IRS will work with you if you are unable to pay taxes owed.
Everyone has to pay taxes, some more than others. But do you know that the same rules that apply to the large corporations could apply to your small business? It’s not about tricks or software magic. It’s written in the law. But we get it; no one has time to read those IRS forms.
We read the long complicated forms (so you don’t have to) and put together the top five reasons you overpay taxes every year.
1. You treat paying taxes as an annual event. As a self-employed taxpayer, you now have the responsibilities of a business owner. Those responsibilities include estimated quarterly tax payments, finance management, and self-employment tax payments. This is why you can’t wait until April to begin thinking about taxes, else you will pay for it.
2. You don’t manage your books. Most self-employed taxpayers blame the tax code for the hours of preparation required to file their taxes. Yes, the tax code is complicated… for folks like Mark Cuban, Elon Musk, Donald Trump and Bill Gates. But for most taxpayers, the tax code reads at the middle school reading level.
If you spend 15 minutes or less per week managing your books, you can file your tax return in just minutes, come tax time. Don’t spend hours on April 15 searching for every receipt or transaction from the prior year. Check out IOOGO Books, a bookkeeping solution designed for freelancers, small businesses, and startups.
3. You aren’t planning for your business. Most small businesses can take advantage of the same tax deductions available to large corporations. These deductions require planning and lots of paperwork. Is it worth it? Schedule a free consultation with one of our experts to see how you could save over $7,000 in taxes every year.
4. You run your company as self-employed. If you are an Uber driver or in the delivery service, you are part of the gig economy. If you provide a service or sell goods, you could be leaving money on the table every year by not incorporating your business. This process is not about having “LLC” or “Inc” after your name.
You must comply with the required annual paperwork to reap the benefits.
5. You love giving money to the IRS. Ok, probably not, but if you don’t take action after reading this, you will prove us right.
If you need help with your taxes, books or want to create a plan to save on taxes, schedule a free consultation with one of our experts today.