Episode 52: Taxes Freak You Out?! Easy Tips to Make Sure You Are Tax Savvy.
In this episode I discuss how to get on top of your taxes this year, so that next season is even easier! The theme throughout this episode is that you need to record all your transactions and make sure to keep business and personal transactions separate. A good way to do this can be to have a separate personal and business bank account. Then, you just need to make sure that everything gets recorded correctly in your bookkeeping software. For this I recommend QuickBooks.
I know that it can be stressful during tax season especially when your books from 2020 are in disarray due to the pandemic. The single most valuable piece of advice I can give is to get your books in order! QuickBooks is a great piece of affordable software that I recommend for managing the bookkeeping of your business. Find out more about QuickBooks here.
The following points are common areas that you should focus on when making sure that you are recording all your transactions and differentiating between personal and business transactions:
I know that this can be overwhelming. That’s where my course comes in. Bookkeeping Basics Bootcamp allows you to take control of your business financials. Through the course you will learn how to manage your own books efficiently and correctly with QuickBooks! Sign up for the course here.
Remember: be current and consistent!
Speaker 1 (00:00):
Hello, how many of you are completely stressed out about your taxes? Right now? I’m here today to give you some easy tips, to make sure that you are tech savvy either for this year or the following year. Why not start preparing now so that you do not feel this way next tax season. All right, guys, let’s dive in and get your pen and your notebook. Take some notes. I want you to do these things this year. So that next year you are completely in control and not stressed about having to either prepare your taxes yourself, or send off this information to your preparer. First and foremost, be organized, do your best to be organized. That means your books should be in order. That means you should be looking at them routinely, whether that be a week every week, whether that be every month, don’t space out any more than that, you need to be organized and have accurate books.
Speaker 1 (01:15):
Get yourself on a system so that you know that you are going to be ready for tax time. When the year is over. Now, I have, um, systems for that. I have methods for that. I walk you through all that stuff in my bookkeeping basics bootcamp course. So that is an option for you. If you’re not interested in taking a course, feel free to reach out to me with questions. Um, come to our Facebook group, to ask questions there, to learn more things there, pay attention to my podcast episodes, or figure out the systems on your own, whatever it takes. I don’t care. I want you to be successful in whatever way possible. Make sure your books are in order. Make sure you’re organized. Now, the other thing that comes along with that is keep your receipts. There are even times where you may purchase something and not know if it can be a business expense, keep them make notes on the receipts.
Speaker 1 (02:16):
If you think you might forget what exactly it was, keep them, get them organized in a folder, scan them into your accounting software or onto your computer, whatever it takes, keep all your receipts one. So you can make sure you can ask questions when it comes time to. So you can provide that supporting documentation to your tax repair or even the IRS. If you happen to ever get audited super important to keep those receipts. The other thing is that kind of ties into these receipts and how I mentioned that. You may not know if a specific expense can be deducted on your business. Taxes is start, consider all these deductions right now. So, um, once again, in my course, I give you a list of some possible deductions that you may not be considering. I’m going to throw a few out here. Now, your home office, if you work from home in a designated space, keep track of the expenses that may be incurred to update that space or to make that space a workable office for you.
Speaker 1 (03:24):
All of those things can be considered a business deduction. The other thing to consider are vehicle expenses. If you have, um, a personal vehicle that you have to drive for business, sometimes that mileage can be deducted. So make sure you are staying organized with, um, when and where you are going. Write it on a piece of paper, put it in an Excel file, put it in your accounting software, use an app. Whatever makes the most sense for you. Keep track of that. You’ll need to know the date and where you were going and why you were going there, how it relates to business, keep all that organized and, uh, track to somewhere. Other things that you might consider are if you do any continuing education, professional development, so courses, uh, seminars, whatever it may be to improve your knowledge for your business. If you hire an accountant, pay for an accounting software, all of these things are considered business deductions.
Speaker 1 (04:27):
There are so many more that you can consider, keep track of them, keep the receipts for them, be organized. Now all of these things I’ve talked about, become a lot easier. If you are keeping your personal and your business transactions separate, which brings me back to having a separate business bank account, keeping organized, keeping your books in order, making sure you’re accounting for all deductions and receipts expenses is going to be a whole lot easier if you have a separate business banking account. So I just wanted to throw that one in there. Now, the last thing that you need to do to set yourself up for a successful tax season or a preparation of your business taxes is to pay your quarterly tax estimates. So why, why is this important? Well, you’re not going to get hit with a huge bill in April. That’s big.
Speaker 1 (05:24):
Um, you’re also not going to be hit with all of the penalties that come along with not paying estimated taxes throughout the year, more cost savings there for your business. And I mean, if that’s not enough, it just, it sets you up for success. It sets you up for a pretty clean tax return and there are no surprises you have already paid in your money. So you’re not going to have to scramble to find it. If you haven’t been saving for it. It’s very important to go ahead and pay quarterly tax estimates throughout the year so that you are really merely just filing your taxes and hopefully not paying much more in maybe getting a little back. The goal is obviously to break even, but getting as close as possible is super important. So if there’s anything I want you to take away from today’s episode, the most important thing you can do to have a successful tax season is to have accurate bookkeeping that is organized.
Speaker 1 (06:27):
And that is in order. It is frequently looked at. And really if you can do that, um, when it comes to tax time, the only thing you may want to do at your end would be to look through your profit and loss and make sure everything makes sense. Does your income look about what you think you made? Did you, when you go through your expenses, do you have 12 payments to your accounting software? Do you have 12 payments to your insurance? Do you have 12 payments to whatever or, you know, your subscriptions, whatever else you consistently pay for each month as a super easy way to check and make sure your book books are accurate, you can do that each month. You can double check it again at the end of the year. Like you said, if you are just consistently reviewing your financials, keeping up with your books, everything will come easier at tax time because it should all be there. And all you can do is double-check to make sure it all looks right before you submit to your tax software or to your tax prepare. I hope that helps you out and wishing you happy tax season and an even better one next year.