Congrats! You’ve officially escaped the 9 to 5 rat race and are either running your own small business or investing in a franchise. While this is incredibly exciting, it also presents a series of new challenges. When you’re in charge of your income, you’re also responsible for managing your business finances including necessary taxes.
If you aren’t careful to stay on top of your expenses, you run the risk of owing hundreds or even thousands of dollars at the end of the year, and you also are more likely to be selected for an audit. In order to avoid either of these uncomfortable situations, it’s important to get organized. Fortunately, this isn’t too difficult.
Keep your receipts. Whenever you buy something online or in a brick and mortar store, make sure that you hold onto the receipt. Outside of groceries and toiletries, a lot of the stuff you’re investing in probably has something to do with your business. From laptops and smartphones to printers and office supplies, if you keep your receipts, you can likely deduct these items as business expenses come tax season.
Pay your taxes. When you’re just starting out with a business of your own it’s tempting to spend without any discretion. However, it’s far better to keep taxes at the top of your mind at all times. Uncle Sam will come for his money regardless of how you’re doing, so it’s important that you set up a separate bank account specifically for tax purposes. Don’t let a month go by without depositing 25% of your income.
Hire an accountant. Being your own boss sounds glamorous, but it requires a lot of hard work and dedication. Hiring employees, attending networking events and growing your business is time-consuming and draining; the last thing you want to have to worry about is finances. Hiring a professional accountant to maintain your books and expenses can save you time and plenty of headaches.