Tax day is a pain, and even more of a pain when you’re the one in charge of your own business. Trying to work out what you have to do and when can get very stressful, and we can put it off and off because of this, which can turn into a huge problem. So what can be done? Well, sometimes to deal with it effectively, we need to block out tax day to get down to the nitty gritty. Here’s a few tips and tricks for making sure you know what to do with your taxes.
When you’re self employed, usually you go through one of two avenues: working as a sole trader as a freelancer, or in a business you own yourself with other people. So we’ll focus on those two options for now.
When You’re A Freelancer
This is one part of the freelancing lifestyle that people don’t think about, or don’t realise is what makes working as a freelancer quite hard. The fact that you have to do your own taxes can often put quite a lot of people off, and makes the end of the financial year a dreaded phase.
Sometimes you’ll owe money if you don’t sign up to the right things, but there’s no shame in this. A lot of people don’t know what they’re doing and have lost a bit of money as a result. So here’s a few handy tips on controlling your taxes, not the other way round!
Use an accountant, or the advice of someone who really knows their taxes. There’s a lot to get to grips with, and it’s practically impossible to do it yourself when you’re up to the tax batting mark for the first time in your career. It may cost you a bit of money, but it means you won’t lose any money on your job or other investments otherwise.
Do plenty of research also. Knowing what you have to pay doesn’t come naturally, and it isn’t an innate biological process no matter how much it seems to be when you talk to an expert. Practice makes perfect after all, and you’ll be paying self employment tax like an employer would at a job that just hands out paychecks to you. Don’t be afraid to take a day, or a good few hours, to get to know everything you need to, and take plenty of notes!
Operating On Behalf Of Businesses
If you’re in a partnership, or part of a group who own a company that’s run from home, you may need to operate on behalf of the business when it comes to tax purposes. Maybe you drew the short straw, or maybe it was agreed you have the most responsibility; however, anyone can prepare a tax return or file on behalf of someone else.
Make sure your business has a tax ID, and that you as the operator also have an ID that lets you file a tax return. It’s good to double up as both an owner and a tax representative, as at the end of the year, you need to make sure you made all the right decisions. Any mislaid blame will therefore not be stuck on you if something goes wrong as a result of dealing with someone else.
You also know your own credentials and where exactly you excel and where you need the aid. If you need to, be sure to hire someone to act on your behalf, but know where the trusted sources are. There’s a lot of tax offices out there!
If You Need Help
There’s no shame in needing a little help with your business needs if you don’t quite have the hang of it. There’s a lot of financial and legal aid available to you if you don’t know where to start at all with your tax issues. Having a lawyer to resolve a wide array of complex tax issues on side is a complete godsend, and saves a lot of hair being ripped out over simple issues, like not knowing which items you have to pay VAT for and tax on import and exports for a small business.
It can be frustrating and even a little scary to file your own taxes, so this was just a little and by no means comprehensive guide to get you started. Don’t let yourself be alone in something like this as you won’t do yourself any favours, and as you become experienced, you can even help others!