Following my first year of self-employment and consulting, filing my 2014 taxes introduced a new set of challenges (and work) that I hadn’t anticipated. Perhaps it was silly of me not to have educated myself beforehand, but hey, this is a learning process, right?
In an effort to help others who journey into the world of entrepreneurship or self-employment, I’d like to share a few of the lessons I’ve learned (and mistakes I’ve made):
- Make quarterly estimated tax payments. This might be obvious for most, but after being ill-advised by an accountant, I opted to make one big payment at tax time. Although I had been putting away an ample percentage of my earnings, I faced a penalty for not paying throughout the year. That mistake won’t happen again.
- Keep records. It might seem brutal and at times exhausting, but it’s crucial for a small business owner to track expenses throughout the year (and save receipts).
- Open a business credit card. To make record-keeping easier, there’s no better way to track business expenses and write offs than with a dedicated credit card. Credit card providers like American Express break down your expenses by category (transportation, entertainment, etc.) and help alleviate the stress of managing your costs.
- Work with a smart CPA. This probably goes without saying, but find a CPA who can help guide you at tax time and ensure you’re making the best decisions for your business.
For more fun tax reading, here are some handy links for tips on write offs: