Richard Butler-Creagh is the founder of Henley Finance which is a short- term bridging finance company. Here is Henley Finance advice about getting your taxes right:
Being an entrepreneur and establishing your own business provides tremendous freedom that you just can’t get working for someone else. When tax time arrives, entrepreneurs must take a totally different approach to taxes than the average worker. For example, when you work for someone else, your employer takes care of withholding taxes from your checks. But when you’re self-employed, that tax requirement falls only on your shoulders.
Know and calculate your self-employment tax obligations.
As mentioned above, you have to pay self-employment tax if you work for yourself. Part of this tax goes to Social Security and part to government medical insurances. This is in addition to individual income tax. If this is the first year that you’re in business for yourself, you’ll need to estimate how much money you expect to earn by December 31st. Otherwise, you can use online worksheet programs to help you figure out your tax obligation based on your prior year’s tax return.
Seek advice from your accountant
Once per quarter, see to it that you sit down with your accountant, and review several items. First, check to make sure you are setting aside the right percentage of funds in your accounts.
Also take a look at the changes in your business since your last meeting with your accountant. Looks at trends, and discuss the company’s status. Finally, know of any changes in tax laws that might affect the way you are currently operating. This meeting doesn’t take a lot of time, but make sure you are doing the right things and heading in the right direction. This gives you time to make course corrections before you stray too far.
Know Your Tax Laws
Your accountant is your best, most consistent source of information about important changes to the tax code. But you can’t get lazy and expect a third party to do everything for you. If you’re an active partner in making sure you’re up to date on the tax laws that affect you, you can be better positioned to take advantage of opportunities to reduce your liability and ensure you’re not caught short when it’s time to write the government a check.
Know Your Tax Deductions
This is another area where it pays to use an accounting service, so talk with certified tax accountants as necessary. While you certainly want to pay all the taxes you owe, there’s no sense in paying more than you’re legally obligated to. Consult with your accountant to make sure you’re positioned to take advantage of the tax breaks you’re entitled to. Just make sure you’re claiming all of your available deductions; many entrepreneurs don’t. While none of us particularly enjoys paying taxes, it’s far less painful when you have the funds to cover your obligation. Careful planning and regular checkups can help ensure you’re never surprised to see your taxes again.
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