if you were to ask me my least favorite part of owning a business, it's bookkeeping and tax time. as far as i'm concerned, they're the living worst. after more than 5 years in business, i'm finally getting the whole "keeping records" thing down, albeit not without many mistakes and errors.
for the first 22 years of my life, my dad just threw my information over to his tax guy and had him calculate everything for me. i had a few part-time jobs through college, so he would figure out if i was getting a refund, and that was about it. i really didn't think about it much, so i had no idea what was coming for me the first time i had to do my taxes myself.
why you need an accountant
i started working full-time on Elisabeth Ashlie in the fall of 2013, so that was the first tax year that i was responsible for figuring it all out. i was given very short notice, so i ran over to H&R Block on about April 12th, just praying that they would be able to look at everything for me. the gentleman that was helping me had his work cut out for him. half of the year i was a student, half of the year i was a self-employed business owner. half of the year i lived in North Carolina, the other half was spent in Chicago. there was a pile of forms for him to complete and very unfinished paperwork from me that he had to go off of. we survived, with a few hiccups, and i resolved to never do that again. i needed a small business accountant, like 6 months ago.
a quick search on Yelp led me to an accountant that seemed to know what he was doing. i set up an appointment with him and, upon leaving the office, knew that i was never letting him out of my grips (too much?). he knew what he was doing, knew what i needed to do throughout the year, and knew all the things that i needed to know to save and maximize deductions. so, if you learn nothing else, remember this: get a small business accountant. someone who specializes in small business who knows the in's and out's of all things tax-related. he's saved me hundreds, if not thousands of dollars, by simply understanding it all. for me, it is so worth the cost of his time. not to mention, that fee is used as a write-off the following year, so it just makes sense.
pay your taxes
knowing what is considered a business expense, what you can write-off, and what you should keep records of (aka everything) is so important. since i do so much of my purchasing online, i archive all of my receipts, so that i can come back to them when i need a record. i have a separate checking account with a debit card for all business purchases, so that i can keep business and personal finances separate, too. i have a personal PayPal account and one exclusively for business. keeping as much of that stuff separate as possible saves me so much time and hassle when it comes time to take an inventory of all of my expenses.
paying estimated taxes is probably my least favorite part of it all. since i don't receive a paycheck with taxes already taken out, i have to do that myself. i have a set percentage of income each month that goes directly into my taxes account. then, each quarter, i have the money that i owe in taxes set aside, ready to be written onto a check. i didn't always do it this way, and let me tell you, it's a special kind of torture to think you have x amount of money, but really 30% of that belongs to the government and you see your bank account cut by a third. harsh lesson learned, to say the least. so, i avoid all of that with a separate account that i deposit into each month. this method works really well for me. it keeps me on track, organized, and guarantees that i'll never be short when the time comes to remit my taxes.
bookkeeping like a pro
i've started using Wave to keep track of all of my sales and expenses and really like it. it's free and super easy to navigate, which are two things i was looking for. one of my business resolutions for 2016 is to do bookkeeping at the end of each month, instead of at the end of the year. not only will i save myself hours upon hours of work, but i want to keep better tabs on how i'm doing throughout the year and make sure i'm on track to meet my goals.
you mean, insurance doesn't come with the job?
i recently received an email asking how i went about getting insured. obviously, one of the things that i miss out on by not being employed by a company is receiving benefits. i know the least about this, but i will say that i spoke with an insurance agent before signing up for a plan and found it helpful. i explained to him my situation, what i'm looking for, and what my budget is, and he was able to send me a list of plans that fit all three.
while these things may be the least fun part of business, they're arguably the most important. you can save yourself a lot of stress and trouble by thinking through these things and making a plan that suits you. i'm sure that i'm not done learning what the best practices are, but i've found some things that work for me and allow me to continue to live my dream everyday. and that, in and of itself, makes all of the hard work worth it.