Congratulations, you started your own company. There are so many perks that come with being your own boss—you can create your own schedule, do something you love, and find personal joy in your success. But, when it comes to your taxes, being an entrepreneur can be tricky. Here’s how to do your taxes if you are an entrepreneur.
Since you will no longer have an employer who automatically takes taxes out of your paycheck, you will need to start paying your taxes quarterly. Meet with a tax professional to figure out your estimated quarterly payment and get used to paying these each quarter.
Form a corporation
It’s obvious to most that when you start your own company, you have to establish a corporation. But do you know what type of corporation is right for you? Choosing the right one could make all the difference in your taxes and save you a great deal of money. A tax professional can help you decide which type of corporation you should form depending on your profits and company structure.
Consider a personal 401k
Many self-employed individuals look to a Roth IRA to create a retirement savings. But, for many, having a personal 401k may be a better option. A personal 401k allows for greater yearly contributions and allows you to contribute with after-tax dollars.
Track your expenses
When you start your own business, there are a ton of expenses that come with it. From equipment to travel, it’s important to keep track of everything you pay for when it comes to your business. Even those that have had a business for a while will have more expenses than an employee of a business. Keep track of everything—meals, entertainment, mileage, etc.—to make the most of your tax return.
If you need help with your taxes, contact a tax professional like Levy Tax & Associates. Contact us at 1-800-TAX-LEVY or visit their website to learn more.