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
Categorize your expenses
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 get the most back on my taxes if I am self-employed? ›
Top 10 Tax Deductions for Self-Employed Workers
- Self-Employment Tax. ...
- Health Insurance Premiums. ...
- Home Office Expenses. ...
- Internet and Phone Bills. ...
- Car Expenses. ...
- Business Travel. ...
- Business Meals. ...
- Retirement Savings Plans.
Buy color-coded folders to store your receipts and documentation, so you can easily find the documentation you need later. Those folders might include: Home and office expenses: receipts; electricity, gas, and water bills; home repairs, maintenance, and renovations; internet and phone bills.
Can I use bank statements instead of 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.
How to file self-employment taxes step by step? ›
At its most basic, here is how to file self-employment taxes ste -by step.
- Calculate your income and expenses. That is a list of the money you've made, less the amount you've spent. ...
- Determine if you have a net profit or loss.
- Fill out an information return. ...
- Fill out a 1040 and other self-employment tax forms.
Documents for purchases include the following: Canceled checks or other documents reflecting proof of payment/electronic funds transferred. Cash register tape receipts. Credit card receipts and statements.
How do you keep paper receipts organized? ›
Folders, files, and storage cabinets are great ways to keep receipts safe and accessible. Include the types of receipts on the label of the folder. For example, you may dedicate a folder to company vehicle-related receipts. Consider organizing the files in your cabinet in alphabetical order so they are easy to find.
Is there an app for organizing receipts? ›
SMART RECEIPTS - YOUR ALL-IN-ONE EXPENSE SOLUTION! Whether you're an individual or a business, Smart Receipts caters to your needs with customizable PDF, CSV, and ZIP reports. Organize receipts into "folders," categorize expenses, and generate professional reports to simplify tax filings and financial tracking.
What is the 50% deduction for self-employment tax? ›
The 50-percent deduction is attributable to a trade or business carried on by the taxpayer that does not consist of the performance of services by the taxpayer as an employee.
Can you write off clothes for work self-employed? ›
Individuals who are self-employed, such as freelancers, independent contractors, or gig workers, have the opportunity to deduct the cost of their work attire and related clothing expenses.
What does the IRS allow you to deduct (or “write off”) without receipts?
- Self-employment taxes. ...
- Home office expenses. ...
- Self-employed health insurance premiums. ...
- Self-employed retirement plan contributions. ...
- Vehicle expenses. ...
- Cell phone expenses.
When assembling your tax return, place the forms in order of their sequence, with Form 1040 (or 1040A) on top. If you have any supporting statements or schedules, attach them all at the end, in the same order as the forms or schedules they refer to.
How to record expenses without receipts? ›
Bank statements, cancelled checks, and credit card statements are good starting points to claim expenses without receipts. If you have separate accounts for personal expenses and business expenses, this makes it even easier to review bank statements for business transactions without a receipt.
Are pictures of receipts ok for taxes? ›
As far as the IRS is concerned, acceptable electronic documents include: Scanned or photographed images of physical receipts.
How much money should I set aside for taxes self-employed? ›
Nevertheless, independent contractors are usually responsible for paying the Self-Employment Tax and income tax. With that in mind, it's best practice to save about 25–30% of your self-employed income to pay for taxes.
How do you pay taxes if you are self-employed? ›
If you're self-employed, you'll also need to complete Schedule SE (Form 1040), Self-Employment Tax and pay self-employment tax on your net earnings from self-employment of $400 or more. There's no withholding of tax from self-employment income.
What tax form should I use for self-employment? ›
Use Schedule SE (Form 1040) to figure the tax due on net earnings from self-employment.
