How do I manage my Finances & Taxes as a Small Business?
First things first, I am not a lawyer, certified tax professional or professional bookkeeper. I am sharing what I personally know as the sole owner of my business & the experiences I have had in the past. Please consult a professional when it comes to your personal &/or business finances or taxes.
As a small business owner or LLC, in which you are the sole owner, the only person running your business, you are going to have to keep your receipts, invoices & records of your expenses & earnings within your business. I use Pay Pal to send my invoices & keep records of my earnings & deductions for everything in my business, with the exception of courses, coaches, software, plugins, website & apps that I purchased for my business.
What Form do I use?
Make sure you file the correct form & report your earning to the IRS. As a sole owner of a small business or LLC, you are allowed to file a Schedule C with your personal tax returns. Schedule C is a Profit or Loss Form for a small business. Make sure you keep track of your earnings & expenses for your Federal Tax Return when it comes to paying the IRS.
Many small businesses use Schedule C. If you have an LLC, the IRS will allow you to attach Schedule C to your personal taxes as the sole owner. Make sure to fill the correct form out. Schedule C is 2 pages long. Make sure you deduct or subtract your expenses from what you made (earnings) in your business. Then transfer that amount (your leftover balance) to your personal tax form & include it with all other personal income tax items. Form 1040 & Schedule C are both due on April 15th. Finally, make sure you turn in your taxes by the required deadline.
Are there any other taxes I have to pay?
In addition to Federal Income Taxes, you also have to pay Quarterly State Taxes as a small business owner or LLC. Quarterly’s are divided into 3 months. Quarter 1 is January, February & March, Quarter 2 is April, May & June, Quarter 3 is July, August & September & Quater 4 is October, November & December. Each State has the specific Tax rate that they charge. When it comes to filing your State Quarterly Taxes you are paying Tax on the amount you earned or made in your business for that Quarter. So if you earned $500 in Quarter 1 & your State Tax is 3% that means you are multiplying 500 by .03. This means you owe the State $15. (This is just an example, not an actual State Tax Rate or my earnings.)
I really do hope that this blog post made it easier for you to understand your personal &/or business finances & taxes. Once again, I am not a lawyer, certified tax professional or professional bookkeeper. I am sharing what I personally know as the sole owner of my business & the experiences I have had in the past. Please consult a professional when it comes to your personal &/or business finances & taxes.
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