While the exact day taxes are due may shift a bit from year to year, there’s no question that every business owner has to file one of these days. If you’re a solo business owner like me, that means pulling together a folder of business receipts, gathering a big stack of 1099 forms from clients, and studiously entering my tax information into apps that help me file my business and personal taxes.
You don’t need an accounting degree or a CPA to do your taxes yourself, but there are some tips you can follow to make things easier on yourself. I reached out to six solo business owners for their favorite tips when it comes to doing taxes. Keep reading for ideas you can follow to save time and money with your taxes.
Athena Lent – Smart Money Latina
Athena Lent is the founder of Money Smart Latina and the brains behind several online businesses. She suggests you start preparing for tax season far before the due date in April.
“Start keeping receipts from the very beginning. Write out every expense you can think of (legit expenses, not Starbucks) and enter them into a software program while attaching a receipt. If you don’t have access to software, download them into a Google Drive file.”
Collective members have access to QuickBooks to upload and store their receipts. But even if you’re running things on a shoestring budget while starting, it’s important to track every business expense so you can deduct them when filing your taxes. Those savings can add up fast.
Michael Anderson CFP – Maranantha Financial
Michael Anderson focuses on taking advantage of your self-employed status to save on your taxes with a self-employed retirement account like an SEP IRA or Solo 401(k). These allow you to make pre-tax contributions to your retirement accounts, just like if you have a traditional job with a large employer.
“I think a SEP IRA is a great idea if you’re looking to put money into retirement and want to do more. I also think it’s great to talk with a seasoned tax preparer to help you work through the options available to you as a business owner.”
Even a CFP recognizes the benefits of working with a tax expert. If you plan on preparing and filing your taxes yourself, a one-hour consultation with an accountant every few years could pay off with better tax strategies you wouldn’t have discovered on your own.
Jim Wang – Wallet Hacks
I’ve always done my own bookkeeping, but I also have a handful of accounting classes under my belt, as well as experience as a Senior General Accountant at a Fortune 500 company. If you don’t have an accounting background, you can save a ton of time and frustration by outsourcing that task.
“My favorite tax tip is to hire a bookkeeper and accountant who is familiar with your business – or that is willing to learn very quickly. They will be able to help you find all the deductions you qualify for. They’re more expensive than doing it yourself, but they should pay for themselves, or find a new one!”
If you can save four hours per month from bookkeeping and turn that into improved sales or profitability, it’s well worth the added cost. Like any business expense, you should look at how the expense will help your business grow in the long run.
Miranda Marquit – Freelancer Writer Academy
Miranda Marquit has extensive experience as a freelance writer and joined forces with friends to launch Freelance Writer Academy. Over the years of working for herself, Miranda picked up some savvy strategies that Collective uses to help you save money on taxes.
“One of the things I did recently was to switch my tax election to an S Corp and get a payroll company to manage my salary and taxes. Now, I pay a small fee each month and the payroll company makes sure I get paid — and they withhold federal and state taxes and send them to the appropriate agencies. It’s really streamlined my business processes and I don’t have to worry about making quarterly estimated payments.”
If you don’t know an S Corp from an LLC, be sure to reach out to Collective or try out our tax calculator find out how much you can save. If you make at least $80,000 per year, we can likely help you save thousands on your taxes every year.
Melanie Lockert – Dear Debt and Mental Health and Wealth Show
Melanie Lockert is another long-time freelancer who grew her business into running live events, money-focused conferences for women, and her own book. When she’s not busy earning money as an awesome business-of-one, she’s thinking about how to help other people overcome mental health challenges with money. But she’s also pretty good at taxes.
“I’m a fan of using the SEP-IRA to invest for retirement while also saving on taxes today. I’d rather put more money toward my future and with a SEP IRA, my tax liability can be lower. On top of that, I use Quickbooks Self-Employed to keep track of expenses and manage my invoices. Keeping everything organized helps make tax time easier, along with working with an accountant.”
Are you starting to see a pattern here? These tax-savvy solopreneurs tend to love tax-advantaged retirement accounts and don’t mind spending a few dollars on bookkeeping or tax expertise where it can help them save time or money in their business.
Jason Steele – Credit card writer at JasonSteele.com
Thanks to his credit card miles and points strategies, Jason Steele hardly ever pays for flights or hotels. He suggests using your credit card to pay for taxes if you’re able to earn a big bonus or valuable rewards at the same time.
“It can sometimes make sense to pay your taxes with a credit card. You’ll be charged a fee of just under 2%, but this can be worth it if you’ve applied for a new credit card and can use this payment to earn a generous new account bonus.”
You may be able to find a deal for 100,000 points after meeting certain minimum purchase requirements on a new credit card for your business. Paying your taxes with the card could help you earn that bonus. Imagine a free business class trip to Europe with a lie-flat seat and unlimited drinks and snacks! It could be possible when you use your business credit card the right way.
You’re the boss of your taxes
When you run a business-of-one, you’re responsible for everything, including taxes. But you shouldn’t be intimidated by that annual ritual of figuring out how much your business made and what you owe the IRS. If you run your taxes intentionally, you can find ways to save money, save time, and cut stress during tax season.
These six experts have decades of combined business ownership experience. Take their expert tax tips to heart when getting your next tax return ready. It could save you thousands of dollars, which I’m sure you would rather keep than hand over to Uncle Sam. But even if you don’t save right away, a well-planned tax strategy is likely to pay dividends for years to come.
Eric Rosenberg is a finance, travel, and technology writer in Ventura, California. He is a former bank manager and corporate finance and accounting professional who left his day job in 2016 to take his online side hustle full-time. You can connect with him at Personal Profitability or EricRosenberg.com.