No one likes to pay taxes, but I don’t like the alternative either (if you don’t make any money in your business then you don’t owe any money). Since the last quarterly payment is due this weekend and filing your taxes is around the corner, I thought we would give you a few tips.
Note: I am not an accountant – so please seek the advice of your accountant when filing your taxes. It is impossible for me to know all the regulations that might pertain to you.
- Keep records – it is VERY important for you to keep good mileage records, if you use your car to travel to your student’s home. When I did this I kept a mileage log every day, with notes in it when it was a trip to someone’s home. This will be used to determine the percentage you use the vehicle for business and will help you figure out your deductions. If you haven’t been keeping records, then start keeping them now.
- I recommend buying a computer for just business use, that way there is no concern if you used it strictly for business (or not).
- Make sure your home office is just for business – otherwise you won’t be able to take the deduction. I have a room in my house that is dedicated to that, but you can start with just a corner of the living room.
- It may come as a surprise that you owe money. It caught me off guard the first year I was in business. After that I was more prepared. For your quarterly payments (although they really aren’t quarterly) I would set aside a certain amount of money each month, that way when payment time comes around you’ll be prepared. You can take a big hit around April 15th because you’ll have to pay any additional taxes you owe and you’ll also have to make payment one for the 2017 tax year. Now would be a great time to get a general idea of what you owe, so you can start saving for that payment.
- Don’t wait till the last minute to try and get all your deductions together. I make it a point to do it every week, so when tax time comes around I just have to print it and take it to the accountant. If you get a burst of business during the year, you’ll also want to speak with them because you might have to adjust your estimated payments, the same goes for if your business takes a down turn, you may be able to pay less – just ask them about it.
I hope 2017 is the best year you’ve ever had for your tutor business!