If you start getting heart palpitations when you hear the date “April 15th”, you’re not alone. Tax season can be so intimidating, mainly because we’re not always prepared for it as bloggers or freelancers. But there are a few things you can do throughout the year to make tax season much more manageable when it finally does come around.
Track & Categorize Expenses (Automatically)
Tracking your expenses is so important as a small business because you get to deduct those expenses from your income, lowering the amount you’ll owe in taxes. And going through all your expenses at the end of the year is typically what takes the longest. If you find a system to track your expenses automatically throughout the year, you’ll a much easier time come tax season.
I’d start by using a specific account for all of your business expenses. Then use Quickbooks Self-Employed to track your expenses (because they make it so easy!). They learn what your expenses are over time and categorize them accordingly. You may have to go in initially to make sure the categories are correct, but you typically just let it do it’s thing and don’t have to worry about it. You can even snap photos or receipts with your phone and upload them to their app! Then, come tax season, you can click on the Expenses Tab and literally have all the info you need right there.
Track Mileage (Automatically)
Everyone has always told me to track the mileage I use in relation to my business, but I always found it to be so annoying! Luckily, Quickbooks Self-Employed has a tool that automatically tracks your mileage for you! For the amount I drive to shoot locations, to pick up props, to meet with clients, it is so worth it to be able to include that mileage under my expenses.
While there are many ways to track your income, I find that using invoices keeps me the most organized. Not all clients ask for an invoice, but I’ll create one for myself either way. I have a custom template I created on Quickbooks Self-Employed that has my logo and everything. It’s so easy to just type in the client and the amount due. Then, when tax season rolls around, you know exactly how much you earned by simply looking at your total invoices that year.
This one is SO important! Trust me, you don’t want to end up having to pay a huge lump sum every April. Because we are freelancers or small business owners, we don’t have a company automatically taking out a certain amount from our paycheck to go towards taxes. So add all that up by the end of the year, and it can be a lot to spend at once. If you pay quarterly, it’s much more manageable! And guess what? Quickbooks will estimate your quarterly taxes for you. Because they’re awesome. Yup!
The reason taxes can be so difficult is because there are so many questions we don’t know the answers to! So I suggest taking advantage of Quickbooks Assistant, or Turbo Tax Self-Employed’s on-demand chat with experts, whenever you’re unsure of something. It’s so nice to have a professional answer those quick questions you have on demand. Why spend hours googling it when you can just chat someone immediately?
Any other questions about taxes??