Tax time is a pain for everyone. It can be even more difficult if you have an online business. However, there are things that online entrepreneurs can do in order to save time and frustration when doing taxes.
Utilize Tax-Filing Software
You can ensure that your taxes will be done correctly by using tax filing software. Turbotax, Taxslayer and H & R Block are some of the websites that allow you to file your taxes for a low cost. Not only do these platforms make it easier for you to file your taxes but they will also ensure that your taxes are done correctly. This will help you save time by preventing errors. If an error is made, then you may need to file an amended turn.
Invest in Your Business
If you have an online business, then you will be able to deduct the expenses that you incur from your taxes. Many people may have to use a lender like Abrams Title Loans to pay for their taxes because the bill is too high. You can lower your tax bill by taking as many deductions as you can. A new computer, printer, USB barcode scanner and tracking spreadsheets are some of the things that you can invest in.
Send Out Your W-2s or 1099s Early
If you have employees or independent contractors, then they are also required to file taxes. It is important to note that there are major differences between independent contractors and employees. If you have employees, then you will be required to pay Medicare, Social Security and unemployment taxes. You do not need to pay those taxes if you have independent contractors.
That is why most online business owners prefer to work with independent contractors. You will have to send out a 1099 if the independent contractor made more than $600 per year. It is important for you to classify employees and independent contractor correctly. If they are not classified the right way, then you may have to pay a penalty.
Take Inventory of Everything
You should take inventory of everything that you have before you do your taxes. It is important to note that you can only write off the things that you have sold as expenses. For example, you purchased $80,000 in inventory. You only sold 75 percent of it. You will only be able to write off $60,000 in expenses.
Keeps Tabs of Everything That You Purchase
You will have an easier time keeping track of your expenses if you have the receipts. There are apps that you can use to keep track of your receipts. 1tapreceipts is one of the apps that you can use. You will be able to upload photos of receipts. You can also forward the invoice receipts from your inbox.
Pay for Your Retirement
If you have a business, then you are responsible for paying for your own retirement. You can start paying for your retirement now. You will not have to pay any taxes on your contributions until you withdraw them. If you are over the age of 50, then you can contribute up to $5,500 per year. You can contribute up to $6,500 per year if you are over the age of 50.