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Q & A: Do I have to pay taxes?

Ahhhhhhh!!

Once again as the end of the year draws near I am seeing questions regarding taxes. One time I tried to offer via Tax Mama a course so that Virtual Assistants could learn about taxes but there were no takers. It’s disturbing to me each year to get questions related to taxes that go something like this:

 

I finally¬† made over 600 dollars per client. I guess I have to file taxes now, what do I do?”

Gah!

I’m going to be serious here, this drives me batty.

When you start a business you need to set up bookkeeping, and if you don’t know how to do it, get a book and learn how to do it.

I highly recommend Tax Mama’s book: Small Business Taxes Made Easy, Second Edition — There are others out there, I don’t care which one you get, but get one. Follow it. Do it. Don’t make it harder than it is, and certainly don’t listen to idiots who proclaim this crazy 600 dollar line above. It’s not true.

There are also really great bookkeeping systems you can use if your business is small like Go Daddy Bookkeeping, or you can get an all-in-one app like Pancakeapp.com. I’m not even an affiliate of either one of these, and I’m telling you to get a bookkeeping program right now, don’t delay. Keep track of what comes into your business (income) and what goes out of your business (expenses). It’s that easy.

There is nothing tricky about it. I use Go Daddy Bookkeeping because I have a very small business and have since it started as Outright for years now.¬† Before that, I used a spreadsheet that I made myself. You can also use a program like QuickBooks Pro 2014 [Download] if you want to. It’s a little more complicated for the non bookkeeping types, but if you have a larger business than mine you might need it. Plus, if you hire a CPA and / or a bookkeeper they will usually help you with this.

If you keep track, save receipts, and use a bookkeeping software program, or a spreadsheet that you make yourself using Excel — you’ll take maybe five to 10 minutes to do your taxes each year. There will also be no stress worrying about it. You’ll also be aware of whether or not you need to send in quarterly tax payments. Go Daddy Bookkeeping actually tells you what you should pay quarterly, if you get the upgraded version. It really could not be easier. Don’t trip yourself up in your business over something like this.

Here’s the part that makes me crazy —

Even if you did not have to pay taxes, it’s important to keep track of your income and expenses so that you can determine if your actions are profitable or not.

I would go nuts not having a clue if I was making money or not. Even if I didn’t plan on paying taxes, which is highly inadvisable, I would keep track of what’s going in and out of my business just out of curiosity of whether or not my efforts were worth it or not. I like to see whether each project I am involved in is paying off too. With programs available today to help you, there is no real good excuse not to do it.

If you’re currently running your business without a bookkeeping plan of some sort, and without any knowledge whatsoever about what you’re doing —¬† please, please promise me that you will get a book, learn to do it yourself, or hire a bookkeeper and a CPA to help you. It would be shameful if you started and ran a successful business that was closed due to nonpayment of taxes. Your bookkeeping program, and your bookkeeper and CPA are tax deductible business expenses. There is no reason not to take your business seriously in this way.

About Stephanie Watson

Mom | Wife | Virtual Assistant | Content Strategist
Stephanie has been working from home for over 20 years as a virtual assistant, template bender, and content writer. She's currently transitioning to business coach. You can learn more about her at her website http://www.barrypublishing.com.

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