Figuring Out Your Tax Obligations as a Self-Employed Person
As an entrepreneur or small business owner, figuring out your taxes can be one of the most daunting tasks of the year. With all the paperwork and regulations to consider, it can be difficult to determine whether or not you need to file taxes for your self-employed business. Fortunately, there are a few ways to make this process easier. Let's break down how to determine if you need to file taxes for your self employed business or not.
Understand Your Earnings Thresholds
The first step in determining whether or not you need to file taxes is understanding your earnings thresholds. To do this, it's important to know how much money you made throughout the year and which type of income applies. For example, if you are self-employed and earn more than $400 from any source in a given year, then you must report that income on your tax return and pay taxes on it. This includes any income from freelance work, investments, rental properties, royalties, etc., so it’s important to keep track of all these sources throughout the year.
Know Your Tax Breaks & Deductions
As a self-employed person, there are certain tax deductions available that can help reduce your taxable income and lower your tax bill at the end of the year. Knowing which deductions are applicable can help determine whether or not filing taxes is necessary for your specific situation. Common deductions include things like office supplies & equipment costs (including computers or software), travel expenses (including airfare & lodging), advertising & marketing costs (including website hosting & design fees), health insurance premiums (if applicable), home office expenses (if applicable), etc. It’s important to consult with a tax professional before taking advantage of any deductions as they may not always apply in every situation. If you need professional assistance on this years tax return one of our dedicated team member will gladly assist you. Click here to learn more about our FREE Tax Estimate services.
Understand Your State Laws & Regulations
In addition to understanding federal laws and regulations regarding filing taxes as a self-employed person, it’s also important to understand state laws and regulations as they may differ from one state to another. Some states require additional forms or special filings depending on where businesses are located or what type of work is being done; others may require different payment schedules for estimated quarterly payments; still others may impose additional penalties for late or missed payments. Understanding these rules ahead of time can help ensure that all requirements have been met before filing taxes each year.