Thank you Block Advisors for sponsoring this post
No matter where we are on our journey to success, we all have one thing in common – each year around this time, we have to file our taxes.
Did you just sweat a little? I sure did. As a freelancer-turned-business-owner, I’ve had my fair share of lessons learned on how to avoid making costly mistakes. Since Bossbility is a popular column on my website where I give entrepreneurship and finance advice, I wanted to get real with you today and share just how I file both my personal and my business taxes each year with Block Advisors by H&R Block.
Whether you are a freelancer or have your own business, it is important to understand that the Internal Revenue Service considers freelancers to be self-employed business owners. This simply means that although you may be entitled to more tax deductions, you may also have to pay more taxes around tax season. In addition to regular income tax, you’ll also have to pay the self-employment tax of approximately 15.3% in 2021. This tax represents the Social Security and Medicare taxes that ordinary employees have taken out of their paychecks automatically.
Ever since I made my first paycheck at the age of 19, I’ve formed the habit of putting half of all my income earnings in an account reserved for taxes. It is also important that I keep track of the three following items throughout the year:
- Monthly Income
- Monthly Expenses
- 1099-NEC Forms which are usually mailed to me from each client that has paid me right before tax season
I’ve been working with Block Advisors and H&R Block throughout the past decade for my business and individual taxes. Block Advisors by H&R Block offers services for bookkeeping and payroll all year-round, making tax season much more manageable. To file my individual tax, I can either choose to “Work With a Pro” or “Do Your Own”. Through Work With a Pro, you’ll get help on creating a P&L (profit & loss statement), business entity structure analysis, and personalized tax help. If you do it yourself, you’ll still get access to unlimited, on-demand help from tax experts.
In 2018, when I launched XYZ Media LLC, I signed my business up to “Work With a Pro” via H&R Block. I was told by my local Block Advisor tax pro to file for an S-Corporation election, which would give me all the benefits of my LLC but with the tax advantages of an S-Corp, like the ability to pass deductions, corporate income, losses, and credits to shareholders.
For your business taxes, below are some steps I recommend taking while preparing to file this year (click here for full list):
- Business Records (Proof of Business, EIN, S-Corp Approval Letter, etc)
- Income (Gross receipts from sales, sales records, returns and allowances, etc)
- Expenses (Advertising, phones, software, etc)
Throughout the past few years, despite which city I was living in – LA, Omaha, or NYC – I have benefited tremendously from the knowledge provided by Block Advisors, who are experts in small business tax and have the tools and services to keep businesses on track. From working with Block Advisors for the past several years for my individual and business taxes, I was able to have my records in order and apply to get approved for a mortgage loan to build our dream house.
Whether you’re self-employed or a small business owner, if you need help with taxes, bookkeeping or payroll, Block Advisors has the expertise and resources to help ensure your business thrives. Working with a Block Advisor gives me the peace of mind each year so I can focus on my business.