5 Filing Tools Entrepreneurs Need for Tax Season

5 Filing Tools Entrepreneurs Need for Tax SeasonJust like the annual trip to the dentist, tax season has crept up on us once again. To take the analogy a step further – if you have brushed, flossed, and rinsed as you should, your visit to the dentist will be quick and pain-free (both physically and financially). However, if not, the pain will long and agonizing. Similarly, if you have kept your accounting records in order the whole year with a constant eye on the upcoming tax season, preparation of your accounts will be pain-free (both from a time and cost factor). If not, the auditor may come to pay you a visit.

Thankfully, these days there are numerous tools to ease the burden of preparing all your tax season documentation. The following are five tools that will help you through the tax season with a minimum of fuss.

1. Salary Calculator – If you haven’t been using a salary calculator to assist in calculating what is left of your gross salary after taxes or to extrapolate weekly, monthly, or annual wages from an hourly wage rate, then you have been wasting your time. There are salary calculators freely available online. They are easy to use and are an excellent basis for preparing your tax return.

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Why Did I Just Get a 1099 MISC in the Mail?

Why Did I Just Get a 1099 MISC in the Mail?This post is brought to you by GoDaddy Online Bookkeeping (formerly Outright) the simplest way to manage your small business finances online. Sign up today for a less taxing tax time!

You probably thought you were done getting mysterious tax forms in the mail, yet this one shows up and ruins your day. You weren’t expecting any more forms at all and were even close to finishing up your taxes once and for all. What are you supposed to do with this thing?

The answer is you must have done some freelance work at some point in the last year, because the 1099-MISC is the form that independent contractors and freelancers receive in lieu of a W-2. Whether or not you remember performing a freelance job or not is irrelevant – it’s time to deal with it.

If this is the case or if you’re still learning about tax documents, we’re here to help! Let’s take a look at what the 1099-MISC is and how you can use it.

What it is

As stated above, the 1099-MISC is what independent business owners like freelancers get at tax time instead of a W-2. But why do you get a separate form? Why don’t your clients just send a W-2 and be done with it?

The answer is in how different parties handle taxes. When you have an employer, they handled most of your tax liabilities for you. They withhold the portion of your taxes the government agency needs and pay it in for you. This doesn’t happen with freelancing. You have the pleasure of paying the necessary taxes to state and federal taxing authorities yourself.

So when April rolls around, employers send a W-2 that has not only your income info but also how much tax they paid in for you. A 1099-MISC, though, only has how much money you made through that particular client. So if you charged someone $1000 to write blog posts for a year, they will send you a 1099-MISC that shows your total income through them as $1000.

What to do with it

You’re probably wondering why you need a tax form to tell you how much you made through clients. After all, you keep good small business bookkeeping records, so what’s the big deal?

Well, this information also goes to the IRS so they know how much income they should expect to see you declare on your income taxes. So don’t file it away just yet.

The first thing you should do with the form is to check your records. Are you sure that 1099-MISC is correct? If you got multiple forms, have you checked that they’re all correct? Verify independently that the form matches your records; otherwise, you’re going to have a big problem on your hands when the IRS comes knocking.

For example, say a client accidentally recorded that they paid you twice for a job. They’ll send you and the IRS a record that they paid you $2,000 this year, while you were actually only paid $1,000. The IRS will expect to see you declare that $2,000 on your income taxes, and will make noise if you don’t.

When you’re sure your 1099-MISC forms are correct, file them away for a few years. Even though the IRS ostensibly has a copy of your 1099-MISC forms, you never know when you might get a “dreaded letter” fro the IRS and need to make your case.

How many 1099-MISC forms did you receive this year? Were they all correct?

MyCorp Presents: Your 2013 Small Business Tax Guide

2013 started with a bit of a bang – with the looming fiscal cliff threatening tax hikes and benefit cuts, Washington scrambled to pass a budget that would allow the USA to continue trying to climb out of the recession. However, many small business owners are wondering what this means for tax laws in 2013. Is anything going to change? Do they have to do anything special? To help sort through the chaos, MyCorporation has prepared a list of important items and small business tax advice for owners to be aware of when filling out their 2012 returns.

2012 Returns and Deductions

One of the biggest concerns that business owners have is how the fiscal cliff discussions will affect their 2012 returns. The American Taxpayer Relief Act of 2012, which was passed on January 1st 2013, was the piece of legislation that averted the fiscal cliff. And for many businesses, its contents will not affect their 2012 return. However, it did retroactively affect a few things, most importantly Section 179 and the Research and Experimentation Tax Credit. Continue reading

Why Should I Hire an Accountant?

When tax return day arrives, many people may wonder if they could have received more money than what they actually were refunded. This leaves many people left wishing that they had taken the time to hire an accountant before their taxes were due, instead of filing them on their own. And although most of your tax return is self-explanatory and can be done on your own, there are still many things that can be missed out on.

Instead of going about it alone, it certainly pays to consider hiring an accountant to do your taxes. Some of the benefits to hiring an accountant to add a helping hand during tax season include: Continue reading