I spent my 20s mismanaging my money, and came to regret all of those impulse purchases placed on credit cards when my credit score plummeted due to missing a few payments. I didn't learn how much this would affect my life until I was denied for both an auto loan and mortgage in the same year due to my bad credit score. I spent the next few years cleaning up my credit report and putting every extra penny I had toward old debts. Having to put my impulse spending on halt was difficult at first, but it was a great learning experience and I now realize how rewarding saving and investing money really can be. I have put a lot of research into good money management techniques, so I decided to start a blog to share what I have learned with anyone who needs help!
Being self-employed can be a great opportunity for some people, but filing and paying taxes can be highly confusing and frustrating for people who work for themselves. If you are self-employed and do not take a regular paycheck each week or month, you will need to pay estimated taxes to the IRS each quarter. If you do not understand this, you should hire a tax expert for help.
Why Do You Have To Pay Estimated Taxes?
If you earn more than $400 per year from your business, you must file a tax return that includes the business income and expenses. If the business you own and operate is your full-time job, you most likely make a lot more than this. Because you are self-employed and do not take a regular paycheck, you will not be paying taxes throughout the year like people do when they receive normal paychecks.
To compensate for not paying income taxes all year long, your business needs to pay estimated taxes on a quarterly basis. The amount you must pay is usually calculated based on your previous year's income tax return. The quarterly payments are determined by dividing the amount of taxes you had to pay last year by four.
What Are The Consequences Of Not Paying Estimated Taxes?
Failing to pay estimated taxes can result in two big problems. The first is that the IRS will charge you penalties for underpaying your taxes. The IRS views tax money as revenue, and they have the right to charge you fees for not paying on time. In addition, the IRS may also charge you interest on this money. These fees will be added to your tax bill at the end of the year if you fail to make your estimated tax payments.
The other problem this can leave you with is a huge tax bill due in April. Paying taxes every quarter is often easier to do than paying a huge lump-sum payment in April. This makes budgeting easier, and you might not owe anything for taxes when you file your return.
Are There Other Benefits Of Hiring A Tax Company?
Not only will a tax expert assist you with paying the correct quarterly taxes, but tax experts can also help you find ways to save money on your taxes. They can help you find things to write off that you did not know about. They can also help you stay organized, which could be a huge relief if you normally panic around tax time.
If you are not organized or good with accounting tasks, you should consider hiring a company that provides tax services. They can help you keep your records organized, and they can also help you prepare your taxes and make your quarterly payments. Contact a business such as Jeffrey Beebe CPA for more information.
Share10 May 2017
