Did you know the tax code is approximately 70,000 pages long? No wonder cringing is our first response when we hear that dreaded word.
Here is what I have learned over the course of my entrepreneurial journey.
We all have to pay taxes on every penny we make, this is why it is so important to have a good bookkeeping system in place. You not only need to know what you need to pay to the IRS but also what purchases can be used as a business expense or deduction.
What about sales tax?
Sales tax is for any physical products you sell! Please note this DOES include online courses or electronic goods, think pdfs or worksheets.
This may be done semi-annual, quarterly, or monthly depending on your volume and your state.
Businesses that sell services do not collect and remit sales tax.
If you have been around a while you know I love a good system! Paying taxes is no different. What works best for me is having a separate account to hold funds for specific taxes and saving throughout the year. I stash away 25% of my monthly income into my tax account. This helps the tax bill at the end of the year not be a shock.
Wondering what exactly happens when your business doesn’t correctly pay taxes?
- A state might ask you to pay a years’ worth of sales tax.
- Your business and personal assets could be seized.
- You could be accused of fraud.
These consequences apply to any business not collecting and remitting sales tax even if it's due to misunderstanding the law instead of ill-natured intent.
I cannot recommend enough having a good accountant in your corner. Not only can the right accountant ensure that you are following all the rules, but they can also save you money! Make sure you interview more than one accountant, ask for recommendations from trusted business owners, and make sure your accountant is a certified CPA!
Kickstart Accounting is a trusted client of mine and these ladies provide lots of free and helpful information, so I recommend you subscribe to their emails and follow them on social!
This year due to COVID Tax Day has been pushed back to July 15th from its usual day of April 15th.
What has been your solution to make taxes stress free?
Rooting for you,