Did you miss Part 1? Check it out here!
O: Outsourcing
As an entrepreneur and small business owner, your time is valuable. You already have approximately a million and one items on your to-do list, and let’s not forget about that life you want to have outside of your business.
As an entrepreneur and small business owner, your time is valuable. You already have By outsourcing your bookkeeping, you get back the time that you would spend bookkeeping, and you get the clarity of your business’s position.As an entrepreneur and small business owner, your time is valuable. You already have But wait – there’s more (yes, said in that cheesy infomercial voice) Not only do you get your time back, but I can almost guarantee that you’ll get back even more time than the hours you spent taking care of your books in the past (or ignoring them🙈). Your books will be in capable hands, so you will free up the time and energy that was spent worrying about them.
P: Profit Percentage
Simply put, the percentage figure indicates how many cents of profit the business has generated for each dollar of sale.
Q: Quarterly Estimated Tax Payments
Taxpayers generally have to make estimated tax payments if they expect to owe tax of $1,000 or more when their return is filed.
Corporations generally have to make estimated tax payments if they expect to owe tax of $500 or more when their return is filed.
Learn more here.
R: Receipts
Here are some general rules to remember when it comes to receipts:
Keep all receipts for your business!
You don’t have to keep paper copies of your receipts. Snap a picture and store it on Dropbox. I like to organize mine in folders by month, but choose a system that will be easy for you to track down that certain receipt you need.
Always always always separate your business and personal expenses. This makes it so much easier when you are organizing your transactions.
Having your business’s receipts organized and ready keeps your books accurate and will help you if you’re ever audited.
S: S-Corp
We’ve talked previously about how making the S-Corp election on your taxes as an LLC can save you money on taxes.
Paying yourself as an S-Corp owner is a little different than paying yourself as a single member LLC. You’re likely used to paying yourself through owner’s draws, but as an S-Corp, you’ll need to pay yourself a reasonable compensation AND PAY PAYROLL TAXES (social security, medicare, etc). This is the biggest (and most important) difference.
I recommend using a payroll provider such as Paychex or ADP because they will calculate the payroll taxes for you and pay them, making the process really easy.
Some frequently asked questions about this topic:
💵 How much is reasonable compensation? This varies depending on several factors including your qualifications, what your role is, your business, and other details, so make sure to ask your CPA to help you determine a reasonable salary.
💵 How often should I pay myself? It’s up to you – you can pay yourself anywhere from once a year to weekly. You just have to pay yourself at least once throughout the year.
T: Tax
👉🏻 Put 30% of your profits into a separate bank account each month for the tax payment. Alternatively, you can pay quarterly estimated tax payments throughout the year if you prefer that route.
👉🏻 If you don’t have a tax preparer already, start looking now so you can take your time and find the person that is right for your business.
👉🏻 Keep track of your business-related miles so you can claim that deduction.
👉🏻 Make sure your books are in order (this is where we come in). It’s so helpful for your tax preparer to receive books that are organized and accurate, and will make tax season less stressful for everyone!
👉🏻Have a system in place to keep track of your receipts. I posted about receipts a couple of weeks ago – go back and see that post for tips.
I know taxes can be intimidating, but they’re so much more manageable when you take a little time to prepare for them ahead of time!
U:Unemployment Tax
Payroll taxes that provide for payments of unemployment compensation to workers who have lost their jobs.
V: Vacation
Taking a vacation as an entrepreneur can be nerve wracking, but it’s important to take time to rest & relax. Our number one tip for a successful trip:
Decide whether you’re going to work or not and stick to that plan.
Sometimes the freedom and flexibility of owning our own businesses can be a double edged sword. We’re able to take off when we want to, so we have the freedom to vacation more, but it’s different than a 9-5 corporate job where you leave your desk and don’t talk to your boss for a week.
I look at it as there are two different types of vacations as an entrepreneur: There’s the “I’m going somewhere beautiful but I’m still going to work, just in the beautiful place instead of at my desk at home” and on the other side there’s the “I’m going to completely check out, you’ll hear from me in a week” type.
Both have their time and place. Both have their benefits and drawbacks. What’s important is knowing ahead of time what you’re going for and sticking to that plan so you don’t end up disappointed.
W: Wages
Wages are money that is paid to an employee of your company.
X: Xero
Why we love Xero 👇🏻
1. Affordable pricing – The monthly plan I use most for clients is only $32, but there’s even one for just $11 that could work for your business.
2. Easy to use – the platform is simple and straightforward, uses easy-to-understand wording, and is intuitive, so it doesn’t take long to learn.
3. The BEST customer service – Seriously, they are so good. I’ve never had an issue getting help quickly, and they are happy to explain things.
Y: Year-End
Time to get your books closed and ready for tax prep.
🖊️ Finish all this year’s bookkeeping. Make sure all expenses and income are accounted for.
🖊️ Reconcile all accounts.
🖊️ Get your tax preparer lined up. If you need a recommendation, ask us and we can refer you.
🖊️ Need to send 1099’s? Make sure you get them out by 1/31.
🖊️ Pay your current year 4th quarter sales taxes by 1/31.
Zero stress now that you know your finance ABCs!
Follow along with us on Instagram to learn more!
The content in this blog post is provided for general informational purposes only and should not be considered professional tax or legal advice. The author is not a Certified Public Accountant, and no assurances can be made regarding the outcomes or consequences of tax returns, IRS actions, or any financial decisions based on this information. Readers are strongly advised to consult with a qualified tax professional or legal advisor for personalized guidance specific to their individual circumstances. The author expressly disclaims any liability for decisions made based on the information presented in this blog post.
