Starting your new business is one of the most exciting things you will ever do in your life.
Between picking your niche, choosing the perfect business name, securing your domain, purchasing your equipment, and starting to build your empire - you have a huge mountain in front of you that you can't wait to start climbing and I am right there with you! ❤️ The journey is SO incredible and rewarding. Being able to say, "I'm the boss of me and my applesauce" is the absolute best! 👊
However, along the way you are going to have questions and luckily for you, there is this whole world-wide web out here just waiting for you to pick its contents apart.
But - let me give you the best advice, right here, right now.
This ONE action has given me all the peace-of-mind and confidence in my business and it is absolutely necessary.
Get a CPA. (Certified Public Accountant)
Do it, like ... yesterday.
You will not regret hiring a trustworthy CPA. They will help you get all of your financials in neat little lines and make sure you are paying all the right tax payments throughout the year so that you don't get hit with a MAJOR tax bill at the end of the year. (Don't ask me how I know about this....)
Ok, fine. If you insist, I will share my troubles with you. My first "big" year in business I was attempting to do all of my taxes myself and when it came time to file with my trusty TurboTax... I had to pay several "pay checks" worth that year all at once. It was a rude awakening and I immediately researched a CPA and hired them for the following year. Not to mention, I did NOT understand all of the terms and boxes that I was checking on TurboTax filing and I probably made a huge mess of things and missed several deductions. Yikes. Don't mess around with your taxes, girl. It's not worth it.
Now, the best "rule" to follow is that as a Self-Employed Boss Babe - you need to keep back about 30% of your income to pay your taxes. As soon as a client pays you, immediately put 30% of that into a separate fund to pay your quarterly taxes. Yep, I know. That feels like SO much, especially as a small business owner but it is our reality. When you set your prices, factor that in and make sure you are charging your worth + expenses!
Your CPA will actually help you get setup to pay your taxes quarterly (4 times a year) into State and Federal Taxes. That is where the 30% that you are holding aside is going to come into play - so you can make your payments throughout the year without hurting financially after each payment. Those 4 payments end up being smaller and more manageable than trying to pay that huge lump sum at the end of the year.
My CPA even gives me all of the paperwork at the beginning of each year so all I need to do is plug my tax payment dates into my calendar and then when a tax payment is due - I write a check, cut off the corresponding tax payment stub from my CPA and drop it in the mail. I also make sure to put the due date a few days earlier than what the stub says in my calendar so I have a couple days buffer to get my check in the mail. (That's just a free pro-tip 😉)
If you are a skim reader, here are the top reasons you need a CPA:
- They will have your back in case of an Audit (You don't want to face that alone!)
- They will get you completely set up with quarterly payments and send you reminders
- They will advise you on when/what to charge for sales tax
- They will make sure you don't get hit with a huge payment at the end of the year
- They know ALL of the best deductions, especially if they specialize in working with businesses similar to yours so they will make sure you don't pay in more than you should.
- Whatever their fee is, it can be deducted as a business expense the following year. So don't worry too much about their fee! My CPA charges me a couple hundred dollars and it is worth every penny.
Ok, how do I find a CPA, Melanie?
Personally, I asked a few of my friends in my town, who are also fellow boss babes and they referred me to a couple different Tax Preparing Businesses in our area. So first, ask some locals that you trust and if that doesn't work - hop on Google, girl! Ask Siri to find a CPA near you! Then reach out to them and ask them if they are accepting new clients and if they know anything about your type of business. If not, move on to the next name on that list until you find someone you feel is a good fit.
I promise you are going to feel light as a feather after you pick a CPA to work with. You will immediately have a huge stress taken completely away from you, just like that. I can hardly describe the relief I felt that day I had my consultation with my CPA.
Now, go get one! Immediately.
In the future, I will post about deductions and how I keep track of my financials throughout the year on my own as well. After all, you do still have to keep track of your own income and expenses and I have a few tips and tricks for that as well.
Was this helpful? Would you like to see more content like this?
Drop me a note below and let me know!
Until next time, Boss babe!
ps. Would you like 50% OFF an entire year of the most incredible business management system?!?
I use HoneyBook and I absolutely love it! You should definitely give it a try! Click the picture to go to HoneyBook and get 50% OFF from me!