Tax Tips for the Independent Contractor

what-taxes-are-for

I’ve been told I’m anal retentive, detailed oriented, overly organized, and maybe even a touch OCD. While those things are true (well, mostly true) what most don’t understand is that it is really that I’ve developed a way to keep myself stress free. Clutter on the desk, an overflowing inbox, or say- my taxes can send me into an anxiety spiral, so this is my way of keeping myself sane and practicing good self-care (my therapist would be so proud).

Tax time can be especially daunting to most, and I watch my colleagues and friends begin to nail bite right after the buzz of New Year’s Eve wears off. There’s no need to spend money on all those manicures, just get organized! Here’s my tips on how to keep your sanity and money in your pocket:

Keep excellent records
Personally, I can’t sing the praises enough of book-keeping software. I use Quickbooks for my business, but Quicken also works just fine. Download all the transactions directly from your bank account and even most credit cards. While it takes a minute to set up the categories, once that’s done all you need to do is sit down and input it all. Quickbooks even allows for a Petty Cash account so you can input your cash receipts and avoid the dreaded box o’receipts at tax time.

Update your books monthly (at least!)
Seriously, you owe it to your mental health to make a date with your books at least every month. I strangely enjoy the act of organizing and balancing my books (I TOLD you I’m anal!), but I know for most they would rather get their teeth pulled than do this. Bottom line- you’re just going to have to bribe yourself with a big glass of vino, premium dark chocolate, or a mani/pedi. I sit down in front of the TV to do mine and watch a particularly good episode of Real Housewives of where-ever. This ritual allows you to attack it in manageable pieces and can even help you get more money back since your accounting for all of your expenses.

Do your taxes early
I never understood procrastination in this situation. Prolonging the reality of how much you’ll owe only gives you wrinkles and heartburn. The earlier you know, the longer you have to put a little aside and budget it you need to pay, or pay some and then get on a payment plan with the IRS. Their interest rates are not bad, cheaper than some credit cards. Filing for an extension is just a waste of money, drawn out anxiety, and sleepless nights. Finally, don’t underestimate the power of a good accountant, they are close to God. Find yourself one, pay their fee, and you’ll have someone to help you out of you ever, gulp, get audited.

There’s two things in life that are certain- death and taxes. The former will surely get you, don’t let the latter.

Need more help preparing your business to be the professional that you are? Schedule your FREE 1/2 hour session with yours truly here today!

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