The Hired Guns Blog

Today we welcome to the blog Beth Temple (@bethtemple4u), a digital consultant whose column is for the “preneurs” in The Hired Guns family. Although her focus will be split among advice for the entrepreneur, intrapreneur, and solopreneur, she will always return to proven ways to get ahead–whether it’s by growing your company, mastering important leadership skills, or learning how to sell yourself.

I know what you’re thinking–you missed the mark. Tax Day has come and gone. Well, for this year it has, but trust me, it will be back next year, and the best time to start planning for April 15, 2012, is now.

If you are like most small business owners (and yes, being just one person counts as being a business!), you’ve probably made some tax mistakes. I did my first year out: I didn’t realize that I had to pay quarterly estimated taxes based on forecasted income. Only made that mistake once.

Here are some things you should be doing now (and forever after) to help ensure a smooth tax season next year:

1) Beth’s 40% rule: In order to be sure I have the money I need throughout the year to pay for taxes, I take out 40% from every check (let me repeat that–EVERY check) and put it in a special account just for taxes. This way I don’t see it, I don’t spend it, and I always have the cash I need. Put the money in a saving account attached to your business checking account–it’s never a good idea to co-mingle your business and personal money. At the end of the year, if there is any left over in the tax account (and there usually is), that’s my yearly bonus. I either invest it back into the business or buy something small as a reward. (You could also use it to bulk up the three to six months’ worth of living expenses that financial experts say we all should have but often don’t.)

2) Deduct, deduct, deduct: Other than the flexibility and diversity of the work, the best part of having your own business is the array of business write-offs. Save EVERY receipt! Restaurant tabs, taxi receipts, seminar tickets (including my class on being your own boss!), office supplies, postage . . . you get the picture. You may not necessarily be able to deduct everything you have a receipt for (see #5, below), but at least you won’t lose any legit deductions because your forgot about a purchase or lost the receipt.

3) Organize those deductions: The last thing you want to be doing on April 14th next year is trying to organize your receipts. Post your deductions at least monthly (I do it weekly). Clip them together or file them by month. You can use either a software program like Quickbooks or a simple Excel sheet (which is what I use) to record them. Be sure you are consistent with your itemization coding so that you can easily sort them out for totaling at the end of the year.

4) Don’t forget the incoming: Make sure you also log all of your income. You do not want to be surprised by a 1099 form come tax time. I record my contracted and paid billings on Excel. This is also a good way to keep track of any outstanding invoices.

5) Get a professional: Just as we want clients to seek us out for our expertise, look for a good accountant if finance is not your strength. My accountant more than pays for herself. I don’t have time to keep up with the tax laws, and I don’t want to figure out my estimated quarterly payments. Also, make it a habit to have a meeting with your accountant at least once a year to do some tax planning. This should be done in the second quarter: by then you’ll know more about your forecasted billings and you’ll have had the full payout from the previous year.

[Image: Shebeko/Shutterstock]