Self Employed Taxes are fun and exciting, said no one ever!
We all know managing our taxes can be stressful if you’reself-employed. The best way to combat the stress is to get organized waybefore tax season rolls around.
I have come up with a list of tax tips that will help you get a handle on your tax return and better prepare for tax season.
- Gather all your tax records in advance
• This includes receipts, canceled checks, bills etc.
• You also want to make sure to keep original documents. Although there are great tools like this Neat Desk Receipt Scanner, you always need to keep originals for yourself.
• Categorize your Receipts. - Set a Tax Prep Day
• Set aside a time and day every month or quarterly to get your taxes in order. Doing so will save you a tonof time and sanity. It will also reduce the chances of missing items. - Review your documents & hire an accountant.
• You are a boss now! You need to do as the bosses do and get an accountant. Taxes and laws change each year and only a tax preparer keeps up to date on the changes and works with you to maximize your return or minimize your tax payments. Not only that but they are there to help and guide you with the important things like understanding retirement accounts & savings.
• Pro Tip: shop around for an accountant, make sure they have expertise in your line of business and if they are certified with a CPA License. - Estimated Tax Payments
• This is a method used to pay tax on income that is not subject to withholding. If you fail to make quarterly payments, you may be penalized for underpayment at the end of the tax year. - Income & Expense Record-Keeping is Key
• To be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in your field of business. A necessary expense is one that is helpful and appropriate for your business - Set up a Retirement Plan
• Plan for the future and reduce your current tax liability. Contributions to your retirement fund are a deduction, so why not do it? No excuses. - Donate
• Pick your favorite charity and donate a little or a lot. These donations are tax deductions too!
Although there are a ton of online tools to simplify the organization process, I find that pen & paper still work best for me. I just don’t think you need to pay an arm and a leg for fancy accounting software, especially if you’re operating a solo business or just have a couple employees.
Since I know that most people suffer from tax anxiety as I do, I created a clean, effective and fairly simple to implement method of tracking all of our tax records. This method includes some vibrant, premium printables that will not only get you tax ready, but they might actually get you to look forward to getting your taxes done.
The first step in organizing your businesses paperwork is gathering all your records.
Having a clear list of all the items you need to take to your accountant is the first step in getting organized.
This list includes:
- Personal Information
- Income
- IRA Info
- Rental Income
- Employee Info
- Education Payments
- Savings & Investments
- Vehicle Info
- Self-Employment& forms
- Pension Income
Next, you are going to need to find out your deductions. I have included a lengthy list of the most common small business deductions.
I highly suggest you either get yourself a binder as I did or set up a designated filing station as acatch-all for all new paperwork coming in.
I have included tabs & divider pages in this printable set to make it easier for you to get started right away if you already have a binder. That way there is no need to run to the store for any supplies.
The tabs are as follows:
- Invoices
- Income
- Expenses
- Receipts
- Contractors
- Mileage
Tax Preparation Printables
Let’s go ahead and take a look at what is included in the Tax Preparation Printables:
- Cover page
- 6 divider pages and tabs
- Family Details page – Everything you need from each family member when you visit your accountant.
- Tax Checklist
- Deduction Guide
- Donation Records
- Income Tracker
- Travel Expense Worksheet – track lodging, transportation, fuel, meals, entertainment, phone, & miscellaneous.
- Invoice Tracker
- Tax Deduction Worksheet
- Tax Payment Worksheet
- Vehicle Log
- Disclaimer
That’s 17 printable pages to get yourSelf Employed Taxes in top shape.
That’s how I prepare for tax season! Are your ready to tackle Tax Season like a pro?
Get your printables below.
FAQs
Categorizing your receipts by expense type (e.g., office supplies, phone calls, travel, meals) is critical to tax savings. You can create different folders, envelopes, or files for each category, such as medical expenses, business expenses, and charitable donations.
How do I file my taxes if I get paid self-employed? ›
Self-employed persons, including direct sellers, report their income on Schedule C (Form 1040), Profit or Loss from Business (Sole Proprietorship). Use Schedule SE (Form 1040), Self-Employment Tax if the net earnings from self-employment are $400 or more.
How much self-employment income do I need to file taxes? ›
The term sole proprietor also includes the member of a single member LLC that's disregarded for federal income tax purposes and a member of a qualified joint venture. You usually must pay self-employment tax if you had net earnings from self-employment of $400 or more.
Can I use my bank statements as receipts for taxes? ›
If you lose a receipt and get audited, your bank statement can be a backup in many cases. Technically speaking, an IRS auditor could deny your deduction if you don't have a receipt. However, if you can provide some reasonable reconstruction of the deduction, many auditors will allow it.
Can I use credit card statements as receipts for taxes? ›
The IRS requires documentation for all itemized deductions on taxes, and you can use credit card statements to verify your claimed expenses and demonstrate proof of payment. Some credit card companies even provide a year-end statement summary so you don't have to go through each month.
What are the 5 filing categories? ›
Usually, the taxpayer will choose the filing status that results in the lowest tax. Determines the rate at which income is taxed. The five filing statuses are: single, married filing jointly, married filing separately, head of household, and qualifying widow(er) with dependent child.
Why is self-employment tax so high? ›
Simply being self-employed subjects one to a separate 15.3% tax covering Social Security and Medicare. While W-2 employees “split” this rate with their employers, the IRS views an entrepreneur as both the employee and the employer. Thus, the higher tax rate.
How do I pay little to no taxes self-employed? ›
As a self-employed individual, you cannot avoid paying taxes, but you can reduce your tax bill by claiming legitimate business expenses as tax deductions. The IRS allows deductions for a variety of costs including office equipment, phone bills, gasoline for business travel, and continuing education.
What is tax deductible for self-employed? ›
If you work from your home or use part of it in your business, then self-employment tax deductions like this one could get you a break on the cost of keeping the lights on. What you can deduct: A portion of your mortgage or rent; property taxes; the cost of utilities, repairs and maintenance; and similar expenses.
What is the 20% self-employment deduction? ›
The QBI deduction is for you if you're a small-business owner, or self-employed, allowing you to deduct up to 20% of your QBI from your taxes. This includes people who have “pass-through” income, which is business income that you report on a personal tax return.
So as long as you earned income, there is no minimum to file taxes in California.
What is the IRS income limit for self-employed? ›
Tax Year 2022 Filing Thresholds by Filing Status
Self-employed individuals are required to file an annual return and pay estimated tax quarterly if they had net earnings from self-employment of $400 or more. Status as a dependent. A person who is claimed as a dependent may still have to file a return.
What is the best way to categorize receipts? ›
If you have a chronological filing system, create folders labeled by month or year. If you have an alphabetical filing system, consider making folders based on a letter. Within these large folders, create more specific subfolders that can help you organize and categorize your receipts in more detail.
How should receipts be organized? ›
When placing your receipts in folders, place each receipt in chronological order. Putting receipts in chronological order is beneficial when you need to look for a specific receipt. Keep the most recent receipts in the front of the folder and older receipts in the back.
How do you categorize receipts for taxes for a small business? ›
Arrange your receipts by categories, such as office supplies, travel expenses, or meals and entertainment. You may also choose to categorize them by month, client, or project. This can make it easier to find specific receipts when needed.
