Hi, I'm Candace
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Does the thought of all things accounting and taxes as an entrepreneur completely freak you out? Don’t worry, I’ve got you.
Let’s walk through the 8 things you need to do throughout the year as a business owner to make sure you are in tip-top shape come tax season. Follow this list and I promise you’ll feel more confident and in control of your financial results!
Psst.. Download this entire checklist to keep handy in PDF format by clicking the button below. You’ll never feel overwhelmed trying to remember what to do and when ever again!
These are the things you should be doing each week, or at a minimum, each month:
This one’s a no-brainer, right? You gotta get paid! That’s Business 101. To make sure you are paid on time and to minimize your administrative time, use an invoice template that contains the right details such as payment terms, itemized charges, and how you accept payment. Platforms such as QuickBooks, HoneyBook, and Dubsado make this a breeze.
Don’t be “that guy”. Make sure you are treating fellow business owners how you want to be treated by your own clients – pay them on time. Track who you have to pay and have funds earmarked to be able to pay your vendors on time to avoid late fees. And be sure to keep copies of your receipts. Speaking of…
You are required to keep copies (paper or electronic) of all sales payments you receive, as well as all of your expense payments you make. Go paperless and use an app such as Expensify to take a picture and store your receipts. Or even just snap a picture of your paper receipt and save it in an album on your phone. Easy peasy.
Learn more about keeping receipts here.
Record each income transaction and expense transaction. You can group all income sales together, but make sure you classify your expenses in groups such as office expenses, advertising, travel, etc.
Bookkeeping is the number 1 strategy to save money on your taxes. Read more about that here!
And luckily, bookkeeping doesn’t have to be super complex. You can start out by just using a spreadsheet. Once you start to grow, it is a good idea to upgrade to an accounting software. Personally, I love QuickBooks.
If you’d like 30% off QuickBooks Online for 12 months, click here!
These are the things you need to do each quarter:
The IRS and many states require business owners to pay estimated income taxes. To figure out what you owe, you want to review your business net income (just another reason why bookkeeping is so important!) which is your business income minus your business expenses.
For federal payments, you want to multiple your net income by about 30%-35% and this is what you’ll want to send in to the IRS. Please note, that this is a SUPER high-level estimate, so if you’d like a more accurate payment, be sure to work with your CPA.
For state payments, you want to do the same, except use your state’s income tax rate.
Depending on the products and services you sell, as well as the state you operate your business in, you may be required to charge and remit sales tax. Many states require quarterly sales tax payments, however depending on your volume of sales, you may have to make monthly payments.
Here are things you have to do just once a year (thank goodness):
If you’ve hired any employees or independent contractors during the year, then this is very important for you. The IRS has a January 31st deadline that requires you to report the annual earnings of your employees (W-2’s) and independent contractors (1099’s). This deadline includes sending your workers, as well as the IRS, copies of these forms.
If you use a payroll company, they will likely handle these filings for you. If you are doing this on your own and not exactly sure what this all means, reach out to your CPA for help!
It’s your favorite time of year!! Okay, that’s probably a stretch. But if you’ve followed the above steps, I can guarantee you that is WILL be a lot less stressful.
At tax time, be sure to carefully review your company’s profit & loss statement (this is just your annual income minus expenses… oh hello again monthly bookkeeping!) before sending it to your accountant. Your accountant will use this to complete your tax return!
Ready for the whole comprehensive checklist so you can feel organized and in charge of your business accounting? You can get my FREE ultimate accounting checklist by signing up above!
Candace is the founder of NewWay Accounting and is a CPA who specializes in working with fellow entrepreneurs. She strives to take the fear and anxiety out of taxes and help empower small business owners to feel more confident and in control of their finances.
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Get ready to feel more confident and in control of your business finances!