Are you currently self-employed or own a small business? Now that you’re on your own, you probably know now how difficult it is to do almost everything on your own, as opposed to being an employee.
Adding to the already extensive list of your responsibilities as a self-employed is assessing your taxes. Tax season is stress season. Dealing with your own taxes can be tricky and daunting. Hey, you don’t have to do it alone! There are numerous online tax professional services and tools out there; you can also consult with an accountant face-to-face.
But should you prefer to deal with your own taxes, then seek advice from a professional later, you may do so. Keep in mind these things when documenting your taxes as a self-employed.
Know your tax situation
Don’t wait til tax season before you start learning about how to handle your taxes. Start researching, trying out tax preparation softwares, and consulting with tax professionals if need be. Identify which deductions you may take advantage. Most important of all, know when and how to submit your tax report.
Since you’re self-employed, you’re responsible for keeping track of all your records. This means what goes in and out of your business: income and expenses. Keep all of your business-expense receipts to take hold of qualified tax deductions and also to present in case you get called for audit.
Save money for your taxes
No one likes it when it’s tax time and they get hit with a whopping tax bill they can’t afford to pay. Start the year right and smooth prior to tax season—set aside a portion of your income allocated for self-employment taxes.
This way you don’t slip into your personal savings account or emergency fund, borrow money from your family or friends, or apply for a loan to pay for your hefty tax bill.
Take advantage of tax deductions
Since you’re operating on your own, you want to take advantage of all the possible deductions to minimize your tax bill. Give this, you’ll want to look at some of these deductions you’ll likely qualify for:
- Office supplies expenses. We all know how expensive office supplies can get. Since they’re a necessity, there’s no possible way to cut back huge on these. Good news though, supplies you use for business- related purposes as well as office equipment essentials such as printer, computer, or hardwares; anything for business use, are all tax deductible.
- Home office deduction. If you work in the comfort of your home, you have a good chance of deducting a portion of the cost of some of your bills such as electricity, internet, office telephone line, and the works.
There are requirements and restrictions though when it comes to deducting your home office. if your “home office” is within the perimeters of your living room, or is in your living room, that’s not deductible. It should be separate from your living areas; it should have a room of its own.
- Professional services fees. If you’ve decided to hire a tax professional or accountant to handle your taxes, good news, you may deduct the service fee as it is a deductible expense.
Get organized before the big day comes. What other tax tips you can advise to our self-employed readers? Share it with us!
About Chie Suarez
Chie is a daytime writer for Depreciator – Tax Depreciation Schedule, a company dedicated completely to Tax Depreciation Schedules that aids the Australian property market.
November 18, 2016