Solopreneurs

Q & A: 13 TaxBuzz Experts Share Their Best Tax Planning Tips for Solopreneurs.

by
Lee Reams II
on
11/21/2016
Q & A: 13 TaxBuzz Experts Share Their Best Tax Planning Tips for Solopreneurs.

The TaxBuzz marketplace includes some of the brightest minds when it comes to tax and advice. With the growth of the sharing economy, we recently reached out to our network for their feedback for some of the best tax planning tips for solopreneurs.

Here are the responses of their shared wisdom:

From Kathy Middleton at Texas based Katz Consulting Bookkeeping & Tax Services LLC -

"Tax planning tip #1 is to keep your personal and business checking accounts separate. This makes it so much easier when you're trying to record and categorize your business transactions. I would also recommend keeping something that closes (a briefcase, zipper bank bag or even a ziplock baggie will work) in the car to put your receipts in. You can then take all those receipts at the end of the month (optimal, however end of year works too) and match them up with your bank statements."

From Joshua Standley at Duluth based DKK Accounting LLC -

"It's harder to tax plan if you don't know where you are at. In order to plan for the future you need to be able to measure the past."

From Carey Gay at Kennesaw based Treasure Tax, LLC -

"The best thing to do for solopreneurs, is to keep their books up to date. By doing this you can know what type of profit you have each month, and can determine what income you'll be taxed on. A meeting with their tax advisor late in the year October or November can do some tax planning to reduce taxable income or spend money in ways to get other deductions. Better yet, have your accountant review and plan for taxes all year, so that you won't be surprised with your tax bill!"

From Bill Parrish and TaxAdvantage

"The best answer available to solopreneurs is to think of yourself just like Ford Motor Company, or Microsoft Corporation or perhaps like the newest and fastest growing dot.com enterprise. Think Big! Don't let yourself be bound by traditional thinking. Instead, create a sound business plan, a reasonable budget, and projections of growth and profitability. Most importantly, surround yourself with the best team of advisors available."

From Tony Proctor at Charlotte based Proctor & Associates -

"First and foremost, have a crystal clear line in the sand between personal and business expenses. Also, be sure to keep plenty of documentation! More is better! It's easier to say, "oh, I don't need this receipt", than to say, "I have no idea where that paper is!"

William Dix from Murfreesboro based Grannis & Associates PC -

"Filing taxes can be tricky so be sure to find a good CPA to help you plan. Also, be prepared to make quarterly estimated tax payments and remember as a self-employed person you are responsible for not only paying income tax but self-employment taxes as well."

From Terrence O'Neill at Round Hill based Terry O'Neill EA LLC -

"If you're married my best advice is for all three (solopreneur, spouse, and tax advisor) to get together for an in depth conversation before the fact. An informed spouse can become a solopreneur's greatest asset if expectations and obligations are clarified up front. Many times I've seen spouses become adversaries simply because the solopreneur kept the spouse in the dark up to the point of our first meeting. That meeting typically takes place just prior to April 15, 20XX, after the close of the prior tax year, and well into the present. So I encourage anyone who is married and contemplating following their dream to invest the time to see your tax advisor and bring your number one asset with you. You'll be amazed with the fruit that inclusion and collaboration produces."

From Keith Ehrich at Florham Park based Ehrich Consulting Group -

"Pay estimated taxes and meet with your accountant quarterly to see if you need to increase or decrease your estimated taxes."

From Pamela Mitchell at PMMBA, LLC -

"Have a financial management support team that consists of at least two key individuals: bookkeeper; accountant; tax preparer. The tax preparer should play a dual role of either bookkeeper or accountant. Having a bookkeeper and accountant is more of a checks-and-balances measure to make sure one or the other isn't cheating you out of your hard earned money. The tax preparer should be kept abreast of all tax planning throughout the year, instead of having everything dumped during "refund" season."

From Rudolph Isaacs at Baltimore based Isaacs Accounting, P.C. -

"Solopreneurs should not commingle their personal and business expenses. My advice would be to open business bank account(s) and to use the business accounts only for business expenses. Depending on the type of entity, these solopreneurs cannot be treated as employees, therefore they should pay themselves by writing a check from the business account payable directly to them. This check would then be deposited into there personal account to handle personal expenses. As your accountant or tax preparer I don't need to see your personal account if you are not commingling. This also helps in making sure we capture all expenses because they were processed through the business accounts. As the taxpayer you are responsible for keeping all receipts to support your income and expenses."

From Jeffrey Quatrone E.A. at Phoenix based Jeffrey J. Quatrone PLLC -

"Keep accurate financial records. A good accounting system such as Xero or Quickbooks will help you work with your tax advisor and save you headaches and money on your tax return."

From Travis Tandy at Fullerton based Tandy Consulting -

"I can't stress the importance of understanding your purchases. Not spending, but actual purchases. Don't go out and buy something because your friend said you needed it. Look into the tax consequences and treatment of that purchase, now and in the future. Pay attention to dates, plan ahead on when and where you will need depreciation in comparison to projected income. Sit on an old machine if you have to for another month if it will help offset higher earnings the following year."

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Lee Reams II

Lee Reams II

CEO

I am a tax and business news junkie who has spent the last 20 years developing and executing "best in class" word-of-mouth marketing campaigns for tax and accounting professionals. With TaxBuzz and CountingWorks we have taken that same commitment to quality content directly to the consumer. Keeping you up-to-date with the latest tax law changes, business growth tips and planning strategies to help you reach your best financial outcome.

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