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Avoid These Common Tax Mistakes BEFORE Tax Time!

The deadline for taxes has long passed, and those who needed to file an extension surely have done so by now. Many of us have already received our returns, and were a little underwhelmed by what we got back (if anything at all).  Don’t get caught at the last minute next year-avoid these common tax mistakes to stay ahead of the curve!

 

Just because you’re a sole proprietor or are self-employed doesn’t mean  you don’t have to pay taxes on a quarterly basis. Of course, the first year, you get a free pass, however, there are certain exceptions based on how much you make. Get into practice of automatically setting aside a percentage of each payment or revenue, then take stock of your P&L statement each quarter. Pay the taxes each quarter to avoid a hefty payment at the end of the year.

 

Speaking of keeping track, it’s incredibly important to keep track of all of your business expenses, including your miles to properly deduct during tax time.  If you don’t already, consider using an accounting program like Quickbooks to let you record and manage expenses. If you don’t have the time, or the wherewithal to do it, hire a bookkeeper who will enter in and reconcile these transactions on a monthly basis.

 

When tracking your expenses, be sure to determine them accordingly in your Chart of Accounts. What this means is when you have expenses like supplies (printer ink, paper, etc), account for them accordingly. Office Expenses are generally equipment. Why is this important? Because you can write off a portion for each year the appliance is in use or write off the full amount (up to a certain maximum) for the year you purchased. For example, if you bought a new laptop this year, you can write off the full price in your 2014 return. While you’re at it, don’t forget to take the actual home office tax deduction; but do so wisely. There has to be a certain portion of a room, or a dedicated room for your business in order to qualify for writing off a percentage of your home expenses including rent or mortgage payments, utilities and insurance costs.

 

Speaking of deductions: it could be that part of the nature of your business requires you to give gifts to your clients, which is fine. But remember that you can only deduct $25 per recipient. If you give gifts readily, make certain you keep all of your receipts.

 

Discuss your legal structure with a tax advisor or a CPA to help you figure out if your structure is still legitimate. For example, you may have started out as a sole proprietor and are paying too much in self-employment taxes. Creating a C or S Corp, or a LLC could help lower your tax bill.

 

Lastly, and I’ve said this a million times. NEVER, EVER, EVER make business purchases with a personal account! Doing so can lead to a considerable amount of confusion, and lead to legal infractions. Do yourself a favor and open a business account the same day you start your business to get it right from day 1.

 

Are there any mistakes you’ve made in the past that you’ve learned from?

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Know Who Your Clients Are In the New Year-My Top Ten: Part Two

Thin Client

Thin Client (Photo credit: ryan2point0)

We started off my Top Ten with some of the most common challenges in client personalities. Here, you’ll find the conclusion of my Top Ten with some of the most challenging clients you’ll encounter and how to curtail them before they jeopardize your reputation.

6. Mr. “I Don’t Know, Maybe, What Do You Think?”: These clients have no idea what they want, which is why they flip flop on their decisions making your job more frustrating. In the end, you know they won’t be happy, but you have to find that happy medium.

Solution: Get EVERYTHING in writing once the project is decided upon. Make all the details clear to keep from any misunderstandings.

7.  Mr. “Emergency!”: Somehow, you’ve managed to stay in business with just one client, and this guy’s the one. This client believes you do nothing but work for him, and therefore must be afforded all of your time.

Solution: Make it clear what the timetables are for all the deadlines, and remind him gently (when things start going awry) that you do have other clients, and he is just as much of a priority as they are.

8.  Mrs. “I Don’t Know What I Want, But It Isn’t That”: This client may not know what she wants, but she knows what it’s not, and most likely it’s everything you propose.

Solution: Moving targets can be very difficult to please. This may just be the client you can’t take on for the sake of your sanity.

 

 

 

 

 

 

9.  Mrs. “I Hate That! I Don’t Know Why, But I Do!”: This client will latch on to any small feature and bring your project to a grinding halt.

Solution: Don’t ask them what colors they want, ask them what they want to accomplish. If they’re still nitpicking your project, you have the option to relinquish the agreement.

10.  Mr. “How Much Is This Going To Cost?”: This penny pinching client is more concerned with the budget than the project.

Solution: Agree on the cost of the project including any possible surprises. If they don’t think they can afford some wiggle room, then you have to consider passing up on them as a client.

*Have you encountered these types of clients and want to know how to make your website and your business more clear and succinct to avoid these types of scenarios? Contact me for a personalized consultation!

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