How to Prepare your Digital Business for Tax Season

So I bet you're wondering as a solopreneur, how in the heck will I get my business ready for tax season. Last year, you really killed it! Raised your prices, made consistent income, and even began paying yourself.

Now it's tax season and you're like 👀... Well have no fear!

I want to share with you some tips to get your small business ready for tax season.

From a bookkeeper's perspective.

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Before we get any further, I have to tell you something.

This post is specifically for sole proprietors and single-member LLCs. It will help you begin the process of getting your Schedule C ready for your tax pro to put together.

Now, that we got that out the way, here's how to make your tax season a breeze.

1. Get on an accounting software!

The first thing you want to do is make sure that you are an accounting software.

Yes.

You thought I wanted to say something else, weren't you.

But no.

Get on an accounting software that is the best specific for you. So, if you're using a CRM, see which accounting software works best with that.

My service-based clients and I LOVE Dubsado. This software currently works best with Quickbooks Online.

If you have an e-commerce business you probably use Shopify. I love how Xero seamlessly works with Shopify.

In my bookkeeping firm, we support our clients with QuickBooks Online and Xero.

I love both softwares but what sets Xero apart is that it's made for the business owner in mind.

If you just started your business journey and want a lower barrier of entry Waveapps is a great start. It has a much lower barrier of entry to get you started and creates pretty good financial statements.

2. Track all your income

You're most-likely going to get 1099s in the beginning of the year. It's so important to cross-reference them with your accounting software to ensure accuracy.

1099s range from 1099-Ks from your payment processor or 1099s from contracted work.

PayPal will give you a 1099K if you collected payments of about $20K and over. Stripe, another payment processor, will send a 1099K once you hit a certain threshold.

Your 1099s will come from contracted work where you got paid $600 or over in 2018.

If you hired contractors and paid them via check, cash or bank transfer $600 or over, here's a post for you!

🗣 Influencers working with brands, its especially important that you're gathering all your 1099s.

And guess what 🙈, even if you don't a form, you're still responsible for claiming income! And if you collected self-employed income $400 and over, like I know you did, it's mandatory to file taxes on it!

3. Understand your deductible expenses

The third thing that I want you to do is understand your expenses or track those expenses.


The first way to better track expenses for your business is by having separate accounts. These checking and savings accounts are separate from your personal.

I know this might be hard if you're just starting out, but I guarantee you. If you just even separate it, even if you have a couple of transactions a month, it'll make your life so much easier. You also want to know what tax deductions are great for your business.

So stop commingling!

Once you separate your biz and personal money, everything gets a bit more clearer.

In another blog post, I talk about some tax deductions you don't want to miss for your business.

Tax deductions allow you to potentially decrease your taxable income.

But... you have to figure out your tax strategy.

If you're wanting to buy a home or get approved for loan, it's ideal to avoid deducting everything you can think of. This way, you don't show low income on your tax returns that can decrease your chances of approval.

Overwhelmed with it all?! Lovely Financials Group is here to help!

If you are a business owner within the first two years of business, I have something super special for you.

It's called the Start Me Up Package. It's where my team, and I help you create a financial system for your business.

In this package, we’ll start you off with 3 months of done-for-you bookkeeping.

This will allow us to create a your own bookkeeping process and train you on the software. You'll be able to take over without the headache of trying to keep up.

After we work together, you'll be able to understand how to work in QuickBooks or Xero.

You'll also have an understanding of how to read your financial reports.

Imagine this...

  • Doing your bookkeeping to not only understand the health of your business

  • But also delivering your FINISHED numbers to your tax pro. They will love you! I promise!

  • AND making informed decisions about your business for the future.

If you're on Shopify, and you're concerned with sales tax, we will have another post coming soon. We'll dig into sales tax because we know that may be the bane of your existence. States are trying to get their money. I don't want you to fall through the cracks of not having your sales tax together.

I hope this post was useful for you! I shared the three ways to prepare your digital business for tax season. 1. Getting on an accounting software. 2. Tracking all your income and your 1099s. 3. Tracking all your expenses and knowing your deductions.

If you liked this post, I'd appreciate it if you shared with someone who you know will need it! Also, if you're looking for a dialogue about this, we'll be going live in the Facebook Group, the Profitable Ladies’ Lounge!

10 Tax Deductions You Never Want to Miss as an Entrepreneur

10 Tax Deductions You Never Want to Miss as an Entrepreneur

Most business owners start their entrepreneurship journey because they found out that society has been misleading. A 9-5 no longer means job security! People of great professions and educational backgrounds have been laid off. Struggling to find the nextjob to support their family. Then something happens. You are up all night, thinking about your passions, aspirations that you now have the chance to live out. You yearn to pursue life on your own terms. You desire to make it on your own, build security with your business. 

When you reached a point in your business where you’re more than breaking even, you may have been guilty of overpaying your taxes. Tax season headaches begin with ill or nonexistent bookkeeping in your business when your business starts. Without proper documentation, you will not be receiving any refunds... Or you may be gifted a hefty tax bill!

What if I can tell you in a simple blog post how to avoid missing out on real cash come tax time. As a virtual bookkeeper, I help online business owners like you, ensure that you never miss out on tax deductions. I relieve the stress and apprehension of you commingling your personal and business expenses. I also ensure proper reconciliation on all of your tax deductible expenses. I even attach the appropriate invoice/receipt to each transaction. This way, you'll do what you do best while remaining confident of the financial health of your business!

What is a 1099-MISC and do I need to file one?!

It's that time of year again!

Tax season.

This month there's an important form you must send out to those who've worked for you throughout 2017. It's called the 1099-MISC form.

The 1099-MISC can be one of the most confusing things known to business owners. Especially those in the online world. Even within the financial community because there's all sorts of "if this then that's" going on in one form.

Let's not forget that they're due on January 31st.

Per the IRS, the 1099-MISC determines how much self-employed individuals get paid. Once we understand the pertinent information (or collect it ahead of time) the form isn't so bad!

Do you have a team?! Wondering if they way you paid them throughout the year qualifies you to file a 1099?! This post can help!

You have to look and see where you've paid someone. And it gets really scary if you come or do pass a deadline of January 31st but it doesn't have to be so scary.

Just as a note, for the duration of this post, I'll be sharing how to navigate a 1099 form in relation to small businesses. Mostly meaning we're worrying about box 7!

Please refer to the IRS for further instructions! Don't take this post as an end-all be-all for 1099s. If you'd like to work with us to file your 1099s, click here.

The 1099-MISC form signifies how much you pay your contractors on this form is important. Your contractors are in charge of paying their own taxes. The form helps the IRS know who is getting coins and from where!

You also want to be careful about who you actually label as a contractor instead of a W2 employee.

That's a discussion for another day...

Who actually gets a 1099-MISC form?!

Sole proprietors, partnerships (LLLPs) and LLCs you pay $600 or more via cash or ACH aka bank transfer.

These people can be the following:

  1. Virtual Assistant
  2. Affiliates you payout
  3. Copywriters
  4. Coaches or consultants
  5. Attorneys (Even if they're an incorporated. Double check with your attorney!)
  6. Bookkeepers
  7. Accountants
  8. And anyone else in between!

***Quick tip that even I got stumped on: When you write the check is when you paid the contractor. NOT when it actually clears!

Who does NOT get a 1099-MISC form?

If someone is an S-Corp or C-Corp. This means that this type of business is actually incorporated (unless they're an attorney).

Your team members who live outside of the US. These individuals should get a W-8BEN form.

Those who you've paid via PayPal, credit/debit card, or payment processor. This means if someone sends you an invoice and you pay through the invoice, you paid through a processor. These companies are supposed to send your contractors a 1099-K at the end of the year.

how and where do I file them?!

1099-MISC forms
25.00
Quantity:
buy now!

I'm all about digitizing everything to make life easier and avoiding postage.

I love both software tax1099 and track1099. They allow you to quickly file directly with the IRS and deliver the forms to your team without the hassle.

The best thing about the software is that it works with both Xero (my fave accounting software) and QBO.

A detailed bookkeeping system with your W9 form will delete deplete the guessing!

If you don't have an a cloud-based accounting system, we need to talk! Check out our Start Me Up program to get those coins in order!

 

How do I avoid getting confused next time around?!

Obtain a W9 form your contractors or vendors at the beginning of your relationship! This form allows you to get your team's correct Legal Name, Tax ID number, and address. Get one from your team members every year because... people do move OR change their business names.

Choose one way to pay them. This will take out the guessing if you paid someone with a check then PayPal then cash... you get where I'm going with this...

If things do come up and you have to pay another route, document the way you paid them. Then by the next 1099-MISC season, there's no scowling your bank statements! Or bugging your contractors.

Have a bookkeeping software (or hire us) to easily track said payments! Nothing like having everything done throughout the year and all you have to do is pull up a software next Jan.

Let us help you!

Take the quiz below to see how many actual 1099-MISC you have to file!


I hope this helps you make delivering 1099s to your team less stressful! Take the quiz below and see how many 1099s you potentially have to give this year!

If you need a bookkeeper on your team to create your 1099s for you, buy below!

 
1099-MISC forms
25.00
Quantity:
buy now!
 
 

The first 5 steps to best manage your money as an entrepreneur

The first 5 steps to best manage your money as an entrepreneur

So you’ve started your business or on the beginning steps of starting your blog. Now what?! You ask yourself. You look to your left and right. All the other ladypreneurs in their chapter 5-20 are killing it in your industry. You get succumbed by imposter syndrome and analysis paralysis and remain stagnant. Simply because you don’t have the slightest idea on what to do first.

You go into groups and email people you idol: How you should monetize your blog? What you should be investing in first? I want to give you some super easy tips on how you can better handle the money in your business. Ease up those tensions a bit.

4 Ways to Drastically Improve the Way You Invoice

4 Ways to Drastically Improve the Way You Invoice

Newbie entrepreneurs seem to have it rough. You’re in the beginning of a new chapter in your life. You’ve birthed a beautiful baby business. It keeps you up at night. You think about it constantly and you always want to show people how cute it is. 

You begin to realize that your baby costs so much but at times, you have trouble speaking up for it. Demanding that your business be is taken more seriously. Creating a routine to make it easier to earn money and help it grow.