For our latest podcast episode, we asked our team and April’s Instagram followers for their questions about business taxes. Most of the responses were along the lines of “tell me everything” or “explain it to me like I’m 5 years old”. So rather than diving into deep tax-related topics, we kept it simple and stuck to the basics. Here are a few of the topics we covered:
If your business is a partnership, you will need to submit your business tax return to the IRS by March 15th. This is because each partner in the business will need to be sent a K-1 form. The information on this form will need to be entered on each partner’s tax return. If you’re a sole proprietor (including a single member LLC) or freelancer, your business tax return will be part of your personal tax return.
TRACK YOUR EXPENSES
Keeping your business expenses separate from your personal expenses will make tax time MUCH easier! Don’t pay business expenses with your personal bank account and don’t buy groceries with your business account. This will keep all of your business expenses in one place, making them easier to find when it’s time to file taxes. If you’re not “officially” a business and don’t have a business bank account, have a credit card to use for only business-related expenses.
WHEN SHOULD I GO TO A PROFESSIONAL
If your business didn’t make a lot of money and didn’t have a lot of expenses, it may be cheaper to use a software program like Turbo Tax to file your taxes instead of going to a tax professional. But as Ron said on the podcast, it really depends on what type of person you are. If you enjoy working with numbers, you may want to do it yourself. If you’re not a numbers person, you’ll probably better off working with a professional even if you didn’t make a lot of money.
SENDING 1099 FORMS
If you used a second shooter or associate photographer on an independent contractor basis last year and paid them more than $600, you should have sent them (and the IRS) a 1099 form by January 31st. If you’re not using a financial software like Quickbooks that will generate these forms, this is another instance where it would probably be best to work with a tax professional.
If you were a second shooter or associate photographer for another photographer / company and you made more than $600 last year and did NOT receive a 1099, you should contact them prior to filing your taxes. If you received a 1099, you will need to enter this on your tax return as additional income. If you were a 1099 worker, this is considered “self-employment income”, so make sure you also enter any expenses related to this work.
HOW DO I AVOID GOING TO JAIL?
This was one of the questions asked of us prior to recording the podcast. If you think you may have messed up in the past, don’t worry. The IRS is perceived as this big evil agency that wants to send you to prison for the slightest error, but it’s really not that bad. If you haven’t filed taxes in the past or made other mistakes, go to a tax professional and “come clean” about it. Even if you owe lots of money, the IRS is usually willing to set up a monthly payment plan to let you pay what you owe over time.
For more small business tax tips, please listen to the podcast and be sure to subscribe so you’ll receive a notification every week when we release a new episode.
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