How Do You Handle Taxes
How are you going to handle all these taxes? This is a big question that comes up because it has to do with money. Money is the essential tool that helps our business grow, run, die, whatever it is that's happening to your business. It usually is revolving around the money that is coming in or out. So let's carefully look at what kind of tax implications you could be considering to make it a little bit easier on yourself. If you have an S corporation, which we just talked about. That is going to be paying quarterly employment payroll taxes. So that's going to be federal and if you have state income taxes, state income taxes as well, that you're paying on a quarterly basis. And those will have the same due dates as prepaying taxes. Now let's talk about if you have formed an LLC or you're a sole proprietorship maybe. You haven't formed your LLC yet. Either way, if you would like to prepay your quarterly taxes, that is also an option for you. And that's going to be a really helpful if you...
don't like getting slammed with a huge tax bill at the end of the year. So the way that you are prepaying your quarterly taxes is by the 15th of the month that comes after the end of that quarter. So for example, January through March is the first quarter of the year. And your taxes are due by April 15th. Now, small caveat but I don't want you to use it as a rationalization or an excuse. Sometimes that date is slightly later. So it could be April 18th, it could be April 22nd, based on when weekends and holidays are occurring during that month. However, as a general rule of thumb, if you can remember to pay or prepay your quarterly taxes by the 15th of the month that comes immediately after the quarter that you're in, then you will not be late, there will not be a penalty. So prepaying your taxes helps you to pay little tiny bits at a time as the year goes on. And then if you have overpaid, you'll get that refund in the mail once you file your taxes for the year. That can really, really help to reduce the huge bill that you might otherwise be facing in the January, February, March area of the next year. If your business is doing well, there is something called a safe harbor rule. So if you wanna know how much to pay in taxes. If you haven't been established yet, that's something that you can work out with a bookkeeper or accountant. If you are established, you can look back at what you paid last year and you will be allowed to pay 100% of what you paid each quarter. And then if you owe extra, because you're doing well and you've made a lot more money in your business, then you will not be penalized just because you didn't pay more than you had paid last year. The exception to this is if you are making $150,000 or more per year. Then you have to pay 110% of what you paid the year prior. So not to get too complicated, but that might be something to look into for those of you out there that are making more than $150,000 per year.