Tax tips for when you’re your own boss

Congrats! You’ve officially escaped the 9 to 5 rat race and are either running your own small business or investing in a franchise. While this is incredibly exciting, it also presents a series of new challenges. When you’re in charge of your income, you’re also responsible for managing your business finances including necessary taxes.

If you aren’t careful to stay on top of your expenses, you run the risk of owing hundreds or even thousands of dollars at the end of the year, and you also are more likely to be selected for an audit. In order to avoid either of these uncomfortable situations, it’s important to get organized. Fortunately, this isn’t too difficult.

Keep these tips in mind near tax season and year-round. These tips will keep you stress-free and help you save tons in the long run.

Keep your receipts. Whenever you buy something online or in a brick-and-mortar store, make sure that you hold onto the receipt. Outside of groceries and toiletries, a lot of the stuff you’re investing in probably has something to do with your business. From laptops and smartphones to printers and office supplies, if you keep your receipts, you can likely deduct these items as business expenses come tax season. Keep a separate folder or filing cabinet for receipts. Make sure to label them with the date, as well.

You may also want to keep a digital copy of receipts, too. Use an app, like Docuscan, to scan receipts and upload them to your computer. These can be easier to sort through, but you’ll want to keep the originals, too, in case you come across any tech issues.

Pay your taxes. When you’re just starting out with a business of your own it’s tempting to spend without any discretion. However, it’s far better to keep taxes at the top of your mind at all times. Uncle Sam will come for his money regardless of how you’re doing, so it’s important that you set up a separate bank account specifically for tax purposes. Don’t let a month go by without depositing 25% of your income. If not, you could end up owing thousands at tax time. If you haven’t saved for that, it could be disastrous.

Hire an accountant. Being your own boss sounds glamorous, but it requires a lot of hard work and dedication. Hiring employees, attending networking events and growing your business is time-consuming and draining; the last thing you want to have to worry about is finances. Hiring a professional accountant to maintain your books and expenses can save you time and plenty of headaches.

By keeping these three tips in mind, you can successfully navigate your new life as your own boss. Good luck and keep on trucking!