About
Hi, Welcome to the Creative Force podcast. This week on the podcast we are talking about…drumroll…taxes! Taxes can be confusing and overwhelming especially for small business owners. In this interview, Rachelle Putt, a registered tax preparer, breaks it all down. We talk about: tax obligations as a business owner, tax deductions, the difference between a 1099, W9, and W7, and more!
My Takeaways
In an LLC you can put up to 25% of your net earnings into a SEP IRA and you can write it off on taxes, with a sole proprietorship you can only put $6,000 regardless of how much you make.
As a business owner you pay 15% employment tax which goes into a social security. As an employee you only pay 7.5% tax and your employer matches it.
It is important to keep track of your finances throughout the year.
You can receive deductions for auto also for having a home office.
Bookkeeping: the activity or occupation of keeping records of the financial affairs of a business.
If you want to have a good business, you want to have good habits and good systems.
Things change constantly – ask a lot of questions, keep learning!
For a tax return preparer, you will need to provide an id, current address, and records of all your income.
A W9 form is for a sole proprietorship. This form is filled out before a 1099. It is important if you hire someone you have them fill out this form first before they do any work for you.
A 1099 form is for someone who is self-employed/contractor. It is not required to submit unless you make $600 or more.
A W2 form is for employees. If you are single, you are not the head of household that only applies if you have a child you provide for.
Keep good records, every week you should reconcile your bank accounts.
Resources
MileIQ – Automatic Mileage Tracker
Email Rachelle at rachelletaxservice@hotmail.com