- Hands down one of the most stressful,
time-consuming, and complicated aspects
of running a business is taxes.
Keeping track of how much you owe, when it's due, to whom,
and more importantly, how to keep them low.
It's a lot.
Stick around because I'm about to tell you 10 things
that you can do to stay on top of your business taxes,
save money, stay compliant,
and most importantly, stay out of trouble with the tax gods.
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Hi, everyone, I'm Attorney Aiden Durham
with 180 Law Co. in Colorado,
and welcome back to All Up In Yo' Business.
Before we get into my 10 tax tips,
don't forget to like, subscribe and share,
and check the description
for links to additional information and resources.
I'd also like to thank
our special partners for this episode,
our friends over at ComplYant.
ComplYant was built to help small businesses
manage their taxes faster and easier.
Their goal is to be a fount of knowledge
for small businesses,
so they can focus more on the business
and worry less about taxes,
because, let's be honest.
For most of us, at least,
the tax stuff sucks.
ComplYant was originally built around one great feature,
a calendar customized for your business
that highlights the deadlines that you need to meet
throughout the year for all taxes,
not just income tax.
Since then, they've added a ton of great features
like a tax budgeting tool and a notice reviewer.
You get some tax notice in the mail
and you're not quite sure what to do with it?
I know I've been there before.
You just upload it to the notice reviewer tool
and the team of experts over at ComplYant will take a look
and tell you exactly what it means
and what you need to do with it.
They've also got this great new tool coming soon
called tax wallet,
which is an automated tax savings tool
that's gonna help you save exactly as much as you need
for future tax bills.
You can take advantage
of the tax deadline calendar for free.
That's right, completely free,
not a free trial, no strings attached,
they've got a free option for their tax deadline calendar.
That, in itself, I think
is what makes ComplYant particularly great.
They've also got this super helpful tax planning playbook
that you can download for free.
Check the description for a link to download that.
But if you want to take advantage
of all of the features that ComplYant offers,
including the tax budgeting,
the tax savings tool, and the notice reviewer,
you can visit this link and use this code
to get two months completely free
if you sign up for one of their paid plans.
Now, this offer for the two months free,
this expires on December 31st, 2021.
So, you should get to it soon if you're interested.
Visit this link and use the code 180LAW21
when you sign up for one of their paid plans
to get two months free.
All right, now let's get into my 10 tax tips.
Tip number one, understand how your entity,
your business structure, affects your taxes.
Not all businesses are taxed in the same way,
nor do they report their taxes in the same way.
Sole proprietorships and single-member LLCs,
they report their taxes to the IRS on Schedule C,
whereas partnerships and multi-member LLCs
use IRS Form 1065.
S corps use Form 1120-S.
So, knowing how your businesses tax
and what form you're gonna use
to report profits and losses to the IRS
is obviously important.
Tip number two, have a clear understanding
of all your other businesses tax requirements.
It's not just federal income tax.
Of course, in most states,
we also have to think about state income tax.
There may also be sales tax
if you're selling goods or services
that are subject to sales tax,
which that's always going to vary by jurisdiction as well.
Often, we're gonna have to deal
with business property taxes.
Most states have an annual report fee
or an annual franchise tax,
and also any business licenses,
and fees associated with those.
This is where ComplYant comes in especially handy.
ComplYant can help you determine
exactly what kinds of taxes apply to your business
based on what you do, how you do it,
and where your business operates.
Tip number three is set calendar reminders
for when your estimated quarterly tax payments
are gonna be due.
In most situations, sole proprietorships, LLCs,
partnerships, S corporations,
we have to make estimated tax payments
if we expect our overall tax liability for the year
to be $1,000 or more.
This includes federal taxes, of course, to the IRS,
but it can also apply to state taxes.
These estimated tax payments are due January 15th,
April 15th, June 15th, and September 15th.
So, mark those on your calendar,
so you don't forget to make an estimated tax payment.
Again, of course, ComplYant is gonna help with this
by automatically adding to the tax calendar
when those payments are due
to help you stay on top of it.
My number four tip is take advantage
of deductible business expenses.
Business tax deductions can, of course,
help to lower your overall tax bill
by reducing your
taxable income.
So, it's important to know what you can
and can't take as a business tax deduction.
According to the IRS,
expenses must be both ordinary and necessary
in order for them to be tax deductible.
Ordinary means that they are common and accepted
in your trade or business.
Necessary means they're helpful and appropriate
for your trade or business.
Now, necessary doesn't mean it has to be indispensable.
It doesn't have to be something you absolutely need
in order to operate your business,
but just helpful and appropriate.
I have another video where I go into more depth
about business tax deductions
and expenses that you might be able to deduct.
So, you can check that out,
I'll link to that in the description.
But a few common expenses
that we can typically take as a tax deduction.
Things like employee payroll if you have employees,
their payroll is a tax deduction.
Rent, office supplies, loan, interest, taxes.
Yes, in a lot of instances,
taxes are actually tax deductible.
Insurance expenses, home office expenses,
and a lot of car-related expenses as well.
Again, check the link for the video in the description
if you want more info on how to handle tax deductions
with your business expenses.
Tip number five,
I'm sure you guys have heard me say this before.
Separate your personal and business income and expenses.
Separate your business and personal bank accounts.
This is outside of taxes.
Not even talking about taxes,
this is absolutely a requirement when it comes to liability
and keeping the liability protection
that you get from an LLC or a corporation.
But even if you're a sole proprietorship
and you don't have to worry
about piercing the corporate veil,
keeping things separate just helps to keep better track
of your income and expenses for your business.
So, you can keep better track of
what you have to pay taxes on
and what you can deduct as a business expense.
It's also gonna make things easier at tax time
'cause you don't have to filter through
what was business, what was personal.
Just keep it all separate, okay?
Tip number six, set up a tax savings account.
Have a separate account.
It can be a checking account,
a savings account, doesn't matter.
Set up a separate account where you put money specifically
to save for your tax payments.
Now, exactly how much you should be saving that,
again, is going to depend on your business entity structure,
your income and your tax brackets,
and the taxes that you have to pay
like, if you have to deal with sales tax or not.
So, exactly how much to save?
It's all going to depend on
the circumstances of your business.
But just kind of a general good rule of thumb
is to put away at least 30% of the business income.
Set aside 30% to save for taxes.
And with ComplYant's new tax wallet tool,
they make this even easier.
It automates your tax savings,
so you really don't even need to think about it.
My tip number seven is to save for retirement
using a SEP IRA.
Being self-employed means that we're, for the most part,
responsible for saving for our own retirement.
We don't have a pension or any other company
that's gonna do that for us.
A SEP IRA or a Simplified Employee Pension IRA
is a great way to do this if you're self-employed.
Contributions to your SEP IRA are tax deductible
and what's even better is that you can take deductions
for contributions that you make up to the day
when you file your taxes.
So, not just for the tax reporting year.
If you're preparing your taxes and you see,
"Ooh, I'm gonna owe a big chunk of money."
You can instead put that into your SEP IRA
to lower that amount.
Tip number eight, use an HSA or a Health Savings Account
to save for medical-related expenses.
Now, there are some requirements for this.
For example, you have to be
on a high-deductible health plan,
but just like with the SEP IRA,
contributions to your HSA are tax deductible
and any interest that you earn in that account
is tax-free as well.
And then distributions that you take out of your HSA
to pay for your healthcare costs,
those are also tax-free,
as long as they fall within
what the IRS considers to be a qualified health expense.
But so basically, we're using pre-tax, tax-free dollars
to pay for health insurance costs,
medical costs, and healthcare-related expenses with an HSA.
My ninth tip is track your business mileage.
If you use your car for work for your business,
you may be able to duct a portion of your mileage.
In order to do this, though, safely,
you need to keep track of every business mile.
There are a lot of ways to do this.
Some people I know just write it down,
they keep a notepad in their car,
write down your starting mileage
before you go out on your business drive.
Write down where you're going,
the purpose of this trip,
have notes of why this is business-related.
And then, of course, write down the mileage
to and from that meeting or that trip for your business.
Or there are a lot of super handy apps that do this for you,
so you don't even have to think about it.
I really like MileIQ, it just notices...
As long as you have the settings on your phone correctly,
it just notices when you're in the car.
And then you can go into the app and say,
"Yes, this was business-related."
"No, this was personal."
And it tracks it all for you.
I think QuickBooks has a tool like that as well,
unless they bought out MileIQ, I don't know.
But I think QuickBooks has a tool for this too.
And finally, my tip number 10, keep an eye on your numbers.
You can do this by scheduling monthly business days,
a specific day at the end of each month
or the beginning of each month,
a day dedicated to sending invoices,
paying your bills, reviewing your expenses,
setting aside money for taxes and any other savings,
budget for the next month,
and any anticipated or upcoming expenses.
Dedicate at least a day each month
to looking at your numbers
and taking care of all of your expenses, invoicing,
all your money-related stuff.
Do a quarterly expense review.
We're paying our taxes quarterly, anyway,
so why not take that time to look over your expenses
over the last quarter?
Is there anything surprising in there
that you think maybe you need to contest with your bank
or ask for a refund for?
Make sure you recognize every expense
that's come out of your account
or charged to one of your cards.
Are there any bills in there that we can lower
or just get rid of altogether?
And then calendar your recurring payments.
There are a lot of programs,
software, apps,
things that we use in our business
that charge on a monthly or an annual basis,
particularly if you're paying for something
on an annual basis, put in your calendar that renewal date
for when the next one's going to be charged.
So, you'll know ahead of time
when that expense is coming up
and if you need to cancel it beforehand.
Because I know for a lot of this,
we'll sign up for a program
or start using some app or something,
and it's working great for a little while,
maybe we drop off of it,
and then we stop thinking about it.
But then all of a sudden, we paid a new year for it.
We paid an entire new year
for this thing that we no longer need.
If you can't tell, that just happened to me recently.
I forgot that I was using this program
because I no longer needed it
and I checked my email and saw,
"Oh, hey, thanks for your payment.
You're renewed for a full year."
And now, I just paid for something
I'm not gonna use anymore.
So, put those dates in your calendar
of when these bills are gonna renew.
So, you: number one, know to expect it
and know if you want to cancel it first.
That's all for this episode, folks.
Drop a comment below,
let me know what you think,
and again, don't forget to check the description
for links to additional information and resources,
including how to get two months completely free
on one of ComplYant's paid plans,
so you never have to worry about business taxes again.
Thank you all so much for watching.
I'm Aiden Durham,
and I'll see you next time.
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