Tickled is not the word. Relieved is a better one. Yesterday, I talked with my tax preparer and found out that instead of paying like last year, I am getting a refund. We are talking about going from paying over $1600 to getting a refund of $10. To some, this is insignificant. Not to me. It's a balancing act. On the one hand, you don't want to owe taxes, right? But on the other, you don't want to give Uncle Sam an interest-free loan.
I think one of the major factors that helped me to almost break even was this. I made my business a priority. In prior years, I focused so much on providing quality services to my customers that I was too tired to devote the time needed to my own books. I know some folks might say, "Shush. Don't admit that," but I believe that honesty begets honesty.
One of the ways I made my business a priority was to upgrade it from a dba to an L.L.C. I wasn't thinking about tax savings at the time but I was able to deduct these costs associated with it:
- Articles of Organization $125
- Home Occupation Use Permit $80
- Business License $50
- Costs of opening a business bank account
- Ordering business checks
- US Post Office box rental
- Accounting system software upgrade
Second, I hired an employee. Doing everything yourself only works if you're not growing. When you're too worn out to take care of yourself, that's a sure sign that you need some help. Sure, there are costs to doing that. Here's a few I encountered:
- Job posting online
- Socialmedia advertising
- Background check
- Cloud technology and apps, i.e. Logmein.com, Google for Business, Stamps.com, etc.
- Adding Payroll software
Just the same, this paled in comparison to the peace it brought me and the capacity to better position my business. No longer exhausted, I was able to recognize deficits and seize the opportunities Life presented. Moreover, my new husband got a happy, more energized wife.
For added measure, I upped my estimated tax. Using Paycheckcity.com
, I estimated my income for the coming year and divided the estimated tax withholdings by 4. Then I made quarterly payments to the IRS using the electronic equivalent of Form 1040-ES
. As the sole member of my LLC, it was both mandatory and critical.. It was pretty cool when my tax preparer told me that my estimated tax paid came to within $10 of the actual tax owed. That's pretty savvy if I have to say so myself.
Understand, I am not offering a formula like Charles Givens' rule for increasing your take-home pay. Though I must admit that back in the 90's I found it very helpful. Neither am I offering tax advice. My intent is merely to celebrate a victory and pass along information that helped me get there. For more helpful advice about deductible business expenses, go to this IRS Website: http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Deducting-Business-Expenses
. It'll help you position your business for success come next tax season.
Odyssey Administrative Services, LLC is a dynamic bookkeeping and administrative services company, bringing skill and insight to its clients. With over eleven years in cash and accrual accounting and thirty-one years in administrative support , OAS specialists work with clients, CPAs and tax preparers to organize and maintain vital financial records. To hear more about our services, email us at email@example.com.