Self Employment – Tax Smarts
Being responsible for your own taxes is probably one of the least favourable aspects of being self-employed. Instead of having your employer do it, you have to ensure you do it yourself. It can be overwhelming! Self employed individuals have to be much more careful with their finances than people who work for someone else. Not only do you not get paid sick time or have automatic medical benefits and a 401k, but you have to make sure you set aside enough money for taxes otherwise you’ll have a huge bill at the end of the fiscal year. You need to think about taxes not just at tax time. You need to consider them throughout the year otherwise you could get yourself into serious trouble. Tax arrears is a problem for many self-employed people and the government looks at this seriously on a regular basis so there’s really no way to ‘hide’ from it.
Are you adequately preparing for tax time?
If not, here are some tips:
• Hire someone to keep paperwork in order
• Ensure you’re getting adequate tax write offs by talking to a tax consultant
• • Determine your approx. tax bracket and set aside that amount monthly for tax time ( Consider putting it in an interest bearing account so that you earn something off it!)
• Pay monthly or quarterly in advance so that you aren’t hit with a huge bill at the end of the year.
What if you find yourself in a tax arrears situation?
If you find yourself in tax arrears, work with your government. Usually, if you’re cooperative, they will make payment arrangements with you.
What if you’re already in serious trouble?
If you’re already in a situation where you could be at risk for having property seized or bank accounts frozen, get some advice straight away! There may be IRS tax relief programs that could help you out.
No comments yet.