As a solopreneur, taxes are one of the most important aspects of running your business. Taxes can be complicated and confusing, but with the right knowledge, you can make sure that you’re staying compliant and keeping your finances on track. Here’s a quick overview from A A Tax & Accounting of the top tax tips for solopreneurs in 2023.
Determine Your 1099 Status
In order to determine whether or not you need to file taxes as a 1099 contractor, you’ll need to know if you are classified as an independent contractor or an employee. Generally speaking, if you have control over when, where, and how you complete your work, then you are likely an independent contractor who must submit 1099 forms each year. In order to determine your status definitively, it’s best to consult with our professional tax accountants to determine the right business structure for your needs.
Keep Accurate Records
It’s always important to keep accurate records throughout the year in order to ensure that your financial records stay organized and up-to-date. For example, if you purchase business supplies throughout the year it’s important to save receipts so that these expenses can be deducted from your taxable income come tax season. Additionally, tracking mileage is also important for maximizing deductions. Make sure that all of your records are secure and accessible when needed.
Calculate Quarterly Taxes
As a solopreneur, it’s important to understand and abide by quarterly tax regulations in order to avoid penalties and interest charges. You may be required to pay estimated taxes four times a year based on what you expect your income will be for the entire year—so make sure that these payments are made on time every quarter! Consulting with an experienced accountant is essential for accurately calculating quarterly taxes as well as staying up-to-date on any changes in taxation laws which could affect your business.
Taxes are certainly one of the more complex aspects of being a solopreneur—but understanding how they work doesn’t have to be overwhelming! By following these simple tips—determining 1099 status, keeping accurate records, and calculating quarterly taxes—you can feel confident knowing that all of your financials are taken care of come tax season. Plus, investing in help from experienced professionals like CPAs or lawyers can provide additional peace of mind when filing taxes each year! A A Tax & Accounting in Cedar City, UT is here to help with all your tax planning, accounting, and filing needs.