Learn more about self-employed taxes with this comprehensive guide from TaxHelp.org.
The first year I made money as a self-employed person, I did almost everything wrong. I had no clue about self-employed taxes, or about paying taxes quarterly. At tax time, as I filled out my own return, I was shocked at how much I owed. The whole thing was a mess that resulted in stress and a bit of debt as I scrambled to come up with money to pay the government.
Since then, my situation has changed. Instead of operating as a sole proprietorship, I've formed an LLC with my husband. Additionally, we have an accountant prepare our tax return now. All of this has made the situation easier, along with the fact that I pay quarterly taxes now and take into account my state taxes, so it's not such a mess any more.
When I was first starting out with my home business, I could have used a helpful guide on self-employed taxes.
Tax Help for the Self-Employed
While it is possible to find answers to your self-employed tax questions on IRS.gov, sometimes the information isn't all in one place, or easy to consume. TaxHelp.org changes that. You can access a free guide for self-employed taxes, and learn the basics of what you need to know.
This useful guide includes the following information about self-employed taxes:
- The basics of self-employed tax status, and the basics about each type of business organization.
- Which taxes you are required to pay, such as FICA taxes, as both employer and employee. This is known as Self-Employment tax.
- Due dates for taxes (hint: some businesses have to file their tax returns in March).
- Tips for keeping your business tax documentation organized throughout the year, including information on which documents to keep.
- Information on bookkeeping and accounting software you can use to manage payroll and other business transactions.
- Overview of deductible expenses, and what constitutes “deductible” in terms of your home business.
- Brief overview of self-employed retirement plan options, and their tax implications.
- Information about free tax preparation assistance and resources.
Overall, this is a handy guide for helping you prepare your self-employed taxes. It would have saved me a lot of grief if I had read something like this when I first started my home business.
When Should You Prepare for Self-Employed Taxes?
To tell the truth, if you haven't prepared for paying your taxes as someone who is self-employed by now, there is little you can do besides look for extra income and hope that you aren't going to wind up in trouble.
The best time to start preparing to pay taxes as a home business owner is right when you get started as a home business owner. You'll be better off in the long run if you can think through your situation, and if you can prepare as much ahead of time.
One of the vital items to consider as you think about whether or not a home business is the right move for you, is taxes. Do you have the discipline to set aside money to pay your taxes regularly? Will you be able to afford your taxes? Many home business owners completely overlook the tax portion of their business like I did. If you want to succeed long-term, you need to pay attention to the tax issues, and start addressing them early on. I course-corrected as soon as I could, but it would have been better to not be in that position at all.
If you want an overview of what you need to know for self-employed taxes, the resource guide from TaxHelp.org is a good place to start.