Just got my first real tax bill for my small business and wow. I was not ready. I knew I had to pay taxes but seeing the number made me realize I've been treating my business account like a personal piggy bank. Any advice for a newbie who's still picking their jaw off the floor?
Taxes
My first business tax bill was a wake-up call
Been there. First year I nearly fainted. Now I set aside 30% of every payment into a separate account. Feels painful but way better than the lump sum.
Wait, you guys are making money?
The first bill is butal. Did you account for self-employment tax too? That one snuck up on me.
Self-employment what now? I just have a sole prop. I thought it was just income tax.
Oh buddy. Yeah, self-employment tax is an extra ~15% on top of income tax. It's for Social Security and Medicare. You'll want to look into that before next quarter.
Alternatively, just don't pay and see what happens. (Don't do that.)
Also, quarterly estimated taxes. If you don't pay those, you get a penalty at the end of the year. Fun stuff.
Get a good accountant. Even if it's just for a couple hours to set you straight. Saved me way more than I paid.
I second the separate account thing. I do 25% and it's been a game changer. Still sucks to see it go, but at least it's not a surprise.
Honestly, this is why I incorporated. Still expensive expensive but at least I feel like an adult.