Set Aside 30 Minutes This Week to Do *This* and Keep Your Small Biz On Track

Photo: Christina Morillo for Pexels

Most people we know move gradually make the move from side-hustle to full-time gig. It’s a great plan to be sure that you’re able to support yourself financially while you’re laying the groundwork for your new business, but it can often lead to a bit of a messy overlap between your personal and business funds. (Trust us, we’ve been there.)

You may keep pushing off getting organized until the proverbial “tomorrow” and let the task of figuring it out fall to the bottom of your to-do list. You end up losing money because of missing receipts and not planning for tax deadlines. Follow the four steps below to make getting organized easier, painless, and maybe even a little fun, all in just 30 minutes.

Step 1: Open a separate bank account for your business ASAP

Is this something that you legally need to do for your business? Maybe. Is this something that you financially need to do for your business? Absolutely.

Even if you’re starting out as a sole proprietor, which is the default structure for anyone who earns income from self-employment, you should set up a separate bank account. Why? Because even if that’s the only thing that you do to get your money organized, you’ll be miles ahead of everyone else in the organization game. You won’t need to sift through a bunch of personal transactions to find business deductions and you won’t lose precious time looking through all of those same personal transactions to see if your client has paid you.

Don’t overcomplicate your business or waste any more time looking at a hodgepodge of transactions, hoping that you’re not missing something. Take 15 minutes to set up a separate account and you’ll be one big step closer to organized money management (congratulations!).

Step 2: Create a list of deductions you can take

There are so many deductions you can take, but it's hard to catch everything. Create a list of things you can deduct to ensure you're not missing anything. Tape the list to a folder and store your receipts in there until you can get them entered into whatever bookkeeping system you use.

Everyone will have different expenses, but a good list to get started with is:

• Web hosting

• Vehicle mileage

• Work travel

• Courses, seminars, licensing, and business-related books

• Shipping and packaging

• Office supplies and equipment

• Health insurance premiums

Step 3: Know what tax forms you need to file, and when

The first few months of starting a business will fly by and you’ll be left scrambling the night before filing deadlines if you don’t pay attention to some key forms and dates.

To get this started here is some basic information for sole proprietors:

Who has to file? Generally, anyone who has net earnings from self-employment of $400 or more needs to report this income at the end of the year. And anyone who is expected to owe more than $1,000 in taxes at the end of the year needs to make quarterly estimated income tax payments.

What form do I file? Most people start their business as a sole proprietor, and the forms that you need to file at the end of the year are Schedule C or Schedule C-EZ (profit and loss from business) and Schedule SE (self-employment tax).

When do I file quarterly estimated tax payments? Keep track of estimated payment deadlines or you’ll face a penalty come tax time. Deadlines for taxes on income received each quarter are April 15, June 15, September 15, and January 15 (of the following year).

Step 4: Set a weekly money date

This won’t be your most fun date, but it’ll probably your most profitable. Set a time to check in every week and make sure that your money is on track. If you do this weekly, it’ll become so easy and quick. Once you have this done, you've earned a glass of wine and a great stress-free weekend.  Some things to do weekly are:

• Send any invoices that are due

• Look at who hasn’t paid and send reminders (+ cash any checks!)

• Pay any outstanding bills

• Pay yourself weekly salary/stipend

Bonus step: Set up a bookkeeping system

Look at you, you overachiever. You’ve got this organization thing down and you want a bonus step? You can feel even more legit and in control of your money by setting up an easy bookkeeping system. This doesn’t have to take a long time and it doesn’t need to cost a lot. There is a range of easy to use programs out there (some are even free!) that are better than that excel sheet you’re using. 

Remember—better to get organized now than to create problems for yourself and your business in the future.

This post was originally published on February 7, 2018, and has since been updated.

MORE ON THE BLOG

13 Things You Didn't Know You Can Write Off

Photo: Smith House Photo

The world may be turned upside-down right now (thanks, COVID-19) and Tax Day has been moved to July 15, but we suggest you make the most of your quaran-time and get those taxes done!

We’re here to help ease some of the stress before you start scrambling to collect receipts and scour all your bank statements from the past year. Sure, taxes can be a drag (or something to look forward to if you know you’re bound to get a tax refund), but if you’re like most independent contractors or freelancers, you might owe a hefty amount of money to your state and the IRS.

However, there are so many things taxpayers fail to claim on their yearly taxes that could definitely help ease the fees that you owe back. To help you get a tax break, we’ve made a list of tax write-offs that many of us fail to claim and you may be overlooking, too.

Out-of-Pocket Charitable Deductions

If you contribute to your community and help with charitable work, or give charitable donations that include out-of-pocket costs, your good deeds may be rewarded with a tax write-off. If you’ve donated food to a soup kitchen, bought clothes for a women’s shelter, or even driven your car for charity, make sure to keep those receipts as they can work as a great tax deduction.

Home Office Costs

Now that we all WFH this deduction may be more useful than ever. So, your bed may not count, but if you use part of your home regularly and exclusively for business-related activity, the IRS lets you write off associated rent, utilities, real estate taxes, repairs, maintenance, and other related expenses. So if you are one of the lucky few working in your pajamas in the luxury of a home office, this year is to make the most of this write off.

Moving Expenses for Your First Job

Once you’ve moved past the job hunting phase and have landed your dream job on the other side of the town, or even the other side of the country, you’ll need to move closer to your job. If you’re moving farther than 50 miles away, you can write-off your moving expenses this season, including transportation.

Child Care Credit

If you have to leave your child, who is filed as your dependent under 13 years of age, with a sitter or at daycare while you’re at work, your child care expenses can serve as a tax credit, up to $3,000. 

"Smart" Tax

If you are going back to school to sharpen your skills, are taking special courses for work, or have bought literature (books or magazines) that are relevant to your field of work, make sure to mark these as your “smart taxes.” Which, goes to show that any money that you spend on your education is always an investment. 

Baggage Fees

Did you know you can get those annoying baggage fees right back into your pocket? Save the airline receipts from any checked baggage that you had to pay for, and mark them as a deduction when you file. 

Energy-Saving Home

If you’re eco-savvy and have turned your house into an eco-friendly home in the past year, you can be rewarded with a great tax credit for your improvements. We know you went for paperless last year, but in this case, you might want to keep those paper receipts. 

Financial Advisor/Accounting

If you have a financial advisor, tax preparer, or even paid to use a program like Quickbooks or Intuit to manage your finances and taxes, you can deduct those fees for the year in which you paid for them. If you still have your receipts from paying your preparer or the programs that you bought, make sure to include those in on your deductions!

Healthcare for Self-Employed

If you’re a boss lady of your own and are paying your own bills, like your own healthcare, then make sure to include your medical and dental bills in your deductions, as well as those bills for your family and dependents. 

Phone Bill

If you’re always using your phone for work and have not yet put your phone bill as a part of your deductions, you have been missing out on getting some money back! Make sure that you keep track of what calls are work and which calls are personal as those will be very important to differentiate when it’s time to file.

Fostering a Pet

Some people can’t commit to adopting a pet, but if you were able to foster a pet in the last year, you can include expenses from the pound, vet, and even food when you’re filing for taxes. A good tax deduction can come from your charitable work. 

Jury Duty

Jury duty may be a drag, but the pay you get from the court is tax-deductible if it was turned over to your employer. It all comes full circle! 

Bad Luck, Accidents, and Damages

There are things that are simply out of our control, like your car breaking down, your roof caving in after a storm, or even you actually breaking a leg after your colleagues told you to break a leg at your client meeting. If you don’t have insurance and you have to pay out of pocket for repairs and medical bills, you can include them when you’re filing for taxes as a tax deduction. It’s not all bad luck after all!

This post was originally published on February 11, 2019, and has since been updated.