20: 10 Tax Tips To Reduce Taxable Income For The Self-Employed Solopreneur, Entrepreneur, Small Bus


20: 10 Tax Tips To Reduce Taxable Income For The Self-Employed Solopreneur, Entrepreneur, Small Business Owner, Virtual Online Bookkeeper and Virtual Assistant Or VA


With more and more people becoming self-employed on the rise, it’s so important to understand how to file your taxes and take advantage of the write-off’s that are available to your business. If you are a self-employed solopreneur, entrepreneur, small business owner, virtual online bookkeeper, virtual assistant or VA, you need to ensure you are knowledgeable about these 10 tax tips. Today, I am diving into these top 10 tax tips that every self-employed individual needs to consider and I’ll help you understand how they make an impact on your taxable income. Make sure you are planning ahead for your tax filing deadline. Don’t wait until the last minute to start looking into these tips. Start early and be prepared for your upcoming tax appointment. I know thinking about doing your taxes isn’t the sexiest topic, but I promise, you’ll want to listen in today to increase the success of your business, and having a successful business…well, that sounds sexy!


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Show Notes:


With more and more people becoming self-employed on the rise, it’s so important to understand how to file your taxes and take advantage of the write-off’s that are available to your business. If you are a self-employed solopreneur, entrepreneur, small business owner, virtual online bookkeeper, virtual assistant or VA, you need to ensure you are knowledgeable about these 10 tax tips. Today, I am diving into these top 10 tax tips that every self-employed individual needs to consider and I’ll help you understand how they make an impact on your taxable income. Make sure you are planning ahead for your tax filing deadline. Don’t wait until the last minute to start looking into these tips. Start early and be prepared for your upcoming tax appointment. I know thinking about doing your taxes isn’t the sexiest topic, but I promise, you’ll want to listen in today to increase the success of your business, and having a successful business…well, that sounds sexy!


Welcome Back…You hear it all the time…filing taxes when you are self-employed is complicated, but I’m here to tell you that this isn’t true. When you have the right tools and understand what’s happening in your small business, there is no reason filing your small business taxes has to be complicated. Today I am going to help you understand my top 10 tips to ensure you are not only ready to file your tax return, but you will also be prepared and can take advantage of any write-offs you are entitled to.


Number 1: Choose your business structure carefully. Whether a Sole Proprietor, Partnership, S Corporation, C Corporation, Limited Liability Company or other entity, the type of legal entity of a company chosen affects how the entity is taxed. I strongly suggest you seek legal and tax professionals to help you with this decision. It is a decision you make when you first start your business, but it will impact the way you file your taxes for years to come, so you want to make sure you are doing this correctly.


Number 2: Keep your business and personal expenses separate. Be sure to set up separate checking and credit card accounts for your business. This will help keep your bookkeeping simple. Don’t use your business account for anything personal and make sure you are using your business accounts for your business expenses. If you are using your personal account for your business expenses, these can easily be forgotten and may not get included as deductions in your tax return.


Number 3: Report your income. If you are paid $600 or more from a business, you should receive a 1099 which you will use to report those earnings on your tax return. Regardless of whether you receive a 1099 or not, you are still responsible for reporting any income you receive in your business. Make sure you are depositing all your business income in your business bank accounts so you can easily capture all of this income.


Number 4: Look into contributing to a retirement plan. Just because you don’t have an employer doesn’t mean you can’t contribute to a retirement plan. There are many plans to choose from including SEP-IRAs, SIMPLE IRAs and 401(k) plans. Look into these early as some plans require you to set them up prior to the end of the year. Keep in mind that even a small contribution will help you in retirement and why not take advantage of a potential tax savings now.


Number 5: Track your mileage. If you are using the standard mileage rate for your business, you can claim a certain amount per mile for your standard mileage rate deduction. These business miles can really add up, but be sure to keep a mileage log explaining your miles so you have proof if you are ever audited. When you don’t track your mileage and claim it as a deduction on your tax return is like throwing a dollar out the window each time you drive two miles. Don’t do this…it is WAY too important for your business to get this deduction.


Number 6: Be prepared to pay taxes. When you are working as an employee, you automatically have Federal and State taxes withheld from your paycheck. As a self-employed individual, you will need to pay these taxes on your own and may need to make estimated tax payments. Estimated tax payments simply means that you are making payments on what you are estimating your taxes will be. In addition, you will need to pay self-employment taxes. Normally when you are working for an employer, you have Social Security and Medicare taxes withheld from your paycheck and the employer pays their portion of Social Security and Medicare. When you are self-employed, you will need to pay both the employer and employee portion. These taxes always seem to surprise small business owners, but not you…you are going to be proactive by setting aside a portion of all the income you are bringing in to pay for your taxes. You could do this on a weekly, monthly or quarterly basis.

Number 7: Do you have a home office? If you are using an office regularly and exclusively for business purposes, you may be able to claim a tax deduction on the portion of your home dedicated to running your business. Expenses such as real estate taxes, mortgage interest, utilities, rent, insurance and other repairs may also be deducted in this home office deduction.


Number 8: Keep track of your health insurance payments. Depending on your situation, you may be able to get a tax break on the premiums you have paid for health insurance. Also, look into a Health Savings Account. A Health Savings Account allows you to put money into a savings account to use for qualified medical expenses. The contributions you make to a Health Savings Account are tax deductible or pretax and your savings grow on a tax-free basis. You are also able to make tax-free withdrawals for qualified medical costs. You don’t have to use the contributions you put into the Health Savings Account; you can let these contributions accumulate year after year.


Number 9: Hire a family member. When you hire a family member, you can take a business deduction for reasonable compensation paid for tasks essential to your business. This will reduce the amount of taxable business income that flows through to your personal tax return. If you decide to hire a family member, make sure that you treat this family member just like you would any other employee and obtain the necessary paperwork.


Number 10: Save your receipts. There are many ways to save your receipts. You can scan your receipts and save them on your computer, you can upload your receipts to a computerized software system such as QuickBooks or you can even keep them in a file. No matter which option you choose, the most important thing to consider is how you are keeping them organized. You want to make sure you are able to retrieve them to show proof if you are ever audited.

Keeping good records will help streamline the time it takes to file your return and understanding these top 10 tax tips will certainly help ensure you are taking advantage of any deductions that apply to you and your business. If you need help, contact your tax professional to answer any questions you may have and make sure you grab your 5 Essentials For Stress Free Bookkeeping at www.FinancialAdventure.com/5Essentials.


And, you know I’m going to ask…what’s at least one thing you will take away from this episode that will help your business succeed and grow your bottom line? If you need some accountability, join our PRIVATE Facebook community and post your action item, we’d love to support you.

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