Tax Season: How to set up your Business Spreadsheet so it's a BREEZE
Taxes!! They are dreaded & honestly one of the hardest parts of business to understand. But once you get the hang of them & get the right tools in place they will be a breeze!
So you started a business, & that takes dough. It’s important when you’re first starting out that you keep good records of the money you invested as well as the additional purchases you make here & there. When I was first starting my photography business I didn’t do as good a job of keeping track of my purchases or the shoots that I booked. For my boutique I had had the practice with my photography business so I knew how important it was to keep a record.
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Keep track with Ease
When I first started both of my businesses I used excel spreadsheets & google sheets to simply create a space where I could add up the purchases & write them down. I also had places to write down what people spent on my business.
For any business that has sales tax it’s important to keep track of the sales tax as well. Later on I transferred over to Quikbooks which helps with keeping track by recording what goes in and out of your account! Now I highly suggest Quikbooks to anyone who is starting a business because they also include inuit to help with taxes when the season comes around.
However, I know not everyone can afford that chunk of change, so keep reading!! Open up a google sheet, or an excel spreadsheet & follow along!
So you need at least 3 columns (sometimes more!).
3. Sales tax
When you think of spending, a lot of times people think about just the money they use to buy supplies and equipment. But there are so many other things that are tax deductible for your business. In every state these vary, but for the most part things like miles driven, meals, software/website, marketing & advertising. Anything that spends money that goes toward growing your business is tax deductible, so KEEP TRACK!
When you file your taxes with a company such as inuit or turbotax they will give you the option to use them as deductibles. Go through them all & see where you can get the deductibles, because this will save you money! It may take extra time but it will save you tons in the end.
When I started wedding photography I would have my brides meet me at Starbucks and we would go over their plans and expectations. This not only grew rapport but it also gave me a nice starbucks drink that was tax deductible. When they say that America is the place to start businesses, it’s so true. In so many ways being the business owner gives you so much more freedom, so use it!
When I say purchases I mean the money that comes into your bank account from people buying your services or products. Keeping track of dates makes it so much simpler when it comes to sales tax & all the taxes in general. This also helps you to find your margins at the end of the year to see how much money you made versus how much you spent.
Maybe you’re taking 10-15 orders per week for your boutique, then I would only write & keep track weekly, but for businesses such as photography, I would write down each client & then the corresponding amount. Especially for photography when you only receive a deposit up front, it’s important to know how much they still owe. I didn’t keep track of this as religiously as I should have when I first started & you would not believe how many of my clients simply didn’t pay me the right amount. & guess what, I didn’t catch it until tax season.
The dreaded word. Taxes. When you think about your business & sales tax, you need to know how much money you are making to determine how often you file your sales tax. Every state is different, so make sure you check with your state's government. But if you make a certain amount you are going to have to file more frequently.
Keeping track of your sales tax makes it so easy when you do have to file. You simply log into your state’s government tax website & fill in the information with what you made & the sales tax will automatically be calculated. Since you have been keeping track of both your purchases & sales tax, it should equal the amount you kept track of. Make sure it is, & double check your math!
Forgetting to file sales tax can mean you acquire a bunch of late fees. So set reminders in your phone to make sure that gets done.
It’s sad to lose your businesses money over not filing. Usually they give you a couple warnings and multiple months to file, but learn from my mistakes & just get it done!
So, there you have it. Simply keeping track of those three things will make it so much easier when you have to file your taxes. You simply put in the numbers you kept track of where they ask for them. It’s as easy as that. Sales tax is only filed through the state so don’t look for that option in your government national tax. But make sure you get those deductibles & watch your taxes go down!
Links to companies that I have used over the years that make this process simple!
Now I know not everyone can afford the help of an accountant or the different softwares that make it easier. & that will just mean more in depth keeping track. But if you have those 3 basic columns and you are religious about keeping track, I know your tax season will be a breeze!