Since those who are self employed don’t have a larger corporation taking care of everything for them, anything to do with taxes can be frustrating and confusing. Not only will you need to keep track of everything, but you’ll also need to make sure you fill everything out correctly and thoroughly. Even missing a few of these things could result in an audit and cause you more stress and trouble than need be. With that being said, here are 6 things you’ll want to avoid during tax time, as told by professionals like Carina Advisors.
Using the Wrong Forms
One of the biggest mistakes that self employed people do is using the wrong forms. Many don’t realize that you can’t use the same form that you would with a traditional job because it doesn’t record all of the information needed. This mistake happens quite a bit with those that are trying to do things themselves. In this case, you should get a professional to help. If you don’t want to go that route, there is plenty of information out there that can walk you through how to fill it out and what information you’ll need.
Bad Record Keeping
Another common mistake is bad record keeping. This includes things like forgetting to write down expenses, throwing away receipts or even keeping poor records when it comes to how much you earn. All of these things are essential to get you the most deductions and the biggest refund possible. It’ll also help you report your income more accurately and prevent you having to make a guess. Keep in mind, there’s always a chance that the IRS will audit you, so make sure you’re keeping everything organized together to ensure that you can show whatever proof or verification they’re asking for.
Waiting to File
Some people who are self employed are expecting to pay a huge amount in taxes, so they wait to file. While it’s fine to wait closer to the deadline, you don’t want to go over that. Even if you file before the deadline, you want to make sure you don’t wait until the last minute because you never know what kind of issues you might run into. Waiting until after the deadline can also cause you to wrack up quite a bit in fees, so it’s better for everyone to just file with plenty of time left.
Not Putting Money Back
Another big mistakes is not putting money back for taxes. Since you’re self employed, taxes aren’t automatically taken out of each check. This means you’re responsible for doing this yourself. Some people figure they’ll just pay it all when they file taxes, but those that are making a good amount of money might end up paying a lot at once. To avoid this, make sure you’re taking out money from each pay check to ensure you have enough to cover your tax bill. If you aren’t sure how much you need to take out, you can talk with a professional or look up information online. Keep in mind, you can either pay this all together or make quarterly payments to help ensure they are definitely being paid.
Skipping Professional Help
While some people choose to do their self employment taxes on their own, it’s a really good idea to get professional help. Not only will these people have an in-depth understanding of tax laws, but they can help ensure you’re filling everything out the way it needs to be. Even if you don’t use them for long periods, it’s a good idea to consult with them at least a few times a year. Having someone with extensive knowledge on your side will help make the entire process easier and help reduce the chances of you getting audited.
Not Knowing Write-Offs
One final tax mistakes is not knowing write-offs. There are many deductions and write-offs that self employed people can take. Not only will this reduce their tax bill, but it could increase their refund. It’s important to take every deduction you qualify for, but it can be hard to figure out exactly what those are. Do research or talk to a professional to ensure you’re getting all the deductions that you can.
While you can do things alone, it’s always a good idea to get help from a reputable company, such as Carina Advisors. Not only will they help ensure that everything is correct, but they can also get you the most deductions and credits possible. This will reduce how much you’ll have to pay out and possibly get you a bigger refund. It’s best to research as much as possible and make sure you’re doing things correctly in order to avoid any types of audits or issues coming up