Congratulations on your new or semi-new home based business! This is such an exciting time for you; having fun connecting with other women (or men) and making some extra money for your family! It’s so awesome that you took this chance on yourself.
Let’s be honest though, there are a lot of unknowns when you take that leap. Now, that we’re coming up to tax time, I’m sure that is one of the unkowns you’re starting to worry about.
Let me ease your mind. It’s not as bad as everyone makes it sound. It does take up some precious time, and it is a very serious matter – any time you have to deal with the government, it’s a serious matter, right? 😉 Let’s just get into it.
Here’s what you can expect:
- If you made over $600 in your business this year, you will receive a MISC-1099 form at the end of January.
- If you are a sole proprietor (don’t have an LLC or corporation) then your accountant is going to ask for all your expenses. He will include these in your taxes on Schedule C.
- You will need to have all your expenses laid out and categorized for your accountant. They will not accept a shoebox full of receipts and dig through them… well, they may have one of their assistants do it, but they will charge you a pretty penny for their time!
- Most accountants will allow you to ask them questions (may charge a fee for their time). So, don’t fret if you still have questions.
- Depending on how well you kept your income and expenses organized throughout the year will determine how quickly your tax prep will go.
- Depending on all of your other tax information (W-2’s, deductions, etc) you may owe taxes to the government. This is why I tell everyone to save 30% of their profit to pay in taxes – of course this depends on your tax bracket. Ask your accountant.
Don’t be scared of it. If you kept all your reciepts and have a separate business bank account, you will be okay and it will be fairly painless. However, I do recommed getting your bookkeeping in order for this next year. At the end of next year, you want to focus on meeting your sales goals, and reflecting on the year… not figuring out your expenses.
Contact me for more information on affordable bookkeeping solutions.