Self-employment can be a lot to manage. After all, it’s a lot of responsibility. When you’re self-employed, you’re not just your own boss; you’re also your own office manager, marketing specialist, and bookkeeper. These responsibilities can seem overwhelming, but there are some steps you can take to manage your books effectively while self-employed. Here are six helpful tips for managing your business’s books!
1. Follow a Business Structure
There are a few main paths to follow when self-employed. Your business will generally follow the structure of a sole proprietorship, partnership, or limited liability company (LLC). The structure you choose will affect licensing and taxation practices that you’ll follow while self-employed, so it’s important to do some research about the right business structure for you.
2. Open a Bank Account
It’s crucial to separate business expenses from personal expenses when you’re self-employed. When you compile all your personal and business expenses, you open yourself up to serious tax and expense issues, not to mention overspending and disorganization. Keeping your funds separated can help you keep better track of your business (and personal) expenses.
3. Set Up Accounting
Accounting is essential for any business, as it will help you keep track of your income and expenses so you can stay informed whenever you need to make important decisions about your business. You can choose between a few primary accounting methods: manual bookkeeping, accounting software, or hiring a bookkeeper.
4. Create a Business Budget
A budget will help you keep track of all your expenses while staying on track to meet your business goals. Be sure to review your business budget regularly and adjust accordingly to meet your changing needs and goals.
5. Pay Income and Withholding Taxes
Generally, employers withhold taxes from employee paychecks. But when you’re self-employed, you will need to keep track of these taxes yourself. Estimate your business taxes based on your business structure and make estimated tax payments if you expect to owe more than $1,000.
6. Research Tax Deductions
Luckily, there are many self-employment tax deductions means to help self-employed individuals reduce their tax liability. Be sure to look into tax deductions for home office expenses, health insurance premiums, retirement plans, and more. A tax professional will be able to give you valuable advice on tax deductions that apply to you.
trust the professionals at the harding group
Unlike other accounting firms, The Harding Group, located in Annapolis, MD, will never charge you for emails or phone calls and will strive for open communication with our clients. Whether you are interested in business advising, tax preparation, bookkeeping and accounting, payroll services, Training + support for QuickBooks, or retirement planning, we have the expertise and years of experience to help. We serve clients in Annapolis, Anne Arundel County, Baltimore, Severna Park, and Columbia. If you are ready to take the stress out of taxes, contact us online or give us a call at (410) 573-9991 for a free consultation. For more tax tips, follow us on Facebook, Twitter, YouTube, and LinkedIn.