Filing your taxes when you’re self-employed or a solopreneur can be more complicated than if you were just an employee with a W-2 form.
While your entrepreneurial spirit will get your farther than most, a misstep could cost you in the form of lost tax refunds, an obnoxious audit process, or even penalties for underpayment. No thanks.
Even more frustrating, Google isn’t necessarily a friend when trying to figure out the whole self-employed tax thing. One seemingly straightforward search query can send you in a thousand different directions.
What’s the best way to survive tax season? How do you know what you don’t know? Where do you even begin?
Struggling with tax stuff? We’ve all been there.
Yes, you’re self-sufficient and resourceful, but when it comes to tax season there isn’t much wiggle room for figuring things out as you go. Making a rookie mistake on your taxes can cost you money, and more importantly, precious time.
So, what’s a savvy boss babe to do?
For BossBabe CEO, Natalie Ellis, understanding how to file her not-so-traditional tax structure and survive tax season came with a big learning curve.
BossBabe is a C corporation, a lesser-known business structure with a specific protocol for processing taxes.
What’s a C Corporation? With this business structure, profits are taxed separately from its owners under subchapter C of the Internal Revenue Code. C corporations pay corporate income tax on its income, after offsetting income with losses, deductions, and credits.
What does that all mean? And how does it actually play out when you’re filing taxes? These are the kinds of questions most solopreneurs get stuck on. If you’re there, you’re not alone — and there are easy solutions to survive tax season that are worth checking out.
Our #1 Resource for Tax Season
Over time, you can learn to master the process. But when you’re first starting to manage your own business taxes, or are just a little late to the game this tax season, finding clear answers can be a struggle.
Unless, of course, you’re equipped with the right resources.
TurboTax has been a massively useful tool for helping BossBabe (and millions of others) prepare and file taxes confidently.
The benefit of investing in a tax tool like this goes beyond saving stress during tax season, although that’s definitely a thing. Tax software also helps save time and brain space throughout the year — and is way easier to learn than the full A-Z of self-employed taxes.
TurboTax is the most user-friendly software we’ve tried. It works like an interview — they ask easy–to–answer questions about your life that affect your tax situation and then they fill in all the right tax forms behind the scenes. Your answers determine which deductions and credits to look for, and what to ask next.
You’ll also be coached along the way as you do your taxes and get the help you need, when you need it, while learning valuable skills every solopreneur needs to know.
Do You Really Need Tax Software?
It will take time before you’re doing your own taxes like a pro, and that’s perfectly okay. Accountants exist for a reason — filing taxes can be confusing AF, no matter how brilliant and badass you are.
Do you need a tax tool? That’s up to you, but let’s be honest: it makes life SO much easier.
If you’re not confident about doing something on your own for the first time, you may think you need to pay a tax preparer to do the work for you. But tax-preparation software and online services have made it easier than ever to self-prepare and e-file your federal and state income tax returns.
Do yourself a favor and download the damn tax tool.
How to Guarantee a Successful Tax Season
Learning how to survive tax season is all about the details. Mistakes are less likely to happen when you’re prepared. The right tax software will make sure you don’t miss a beat, but here are a few ways to guarantee a smooth and easy tax season…
1. Make sure you have accounted for all income. If you earn income through multiple sources such as a side-hustle or rental income, these will all need to be included in your taxes. If your side-hustle earned over $400, you have to pay taxes on it. But, as a self-employed contractor, you may be able to take advantage of additional deductions, including home office space, necessary equipment, internet, mileage, and more.
2. Develop a sold filing system. Shoeboxes are for shoes. Make sure you keep your financial records in clearly labeled and easily accessible files. A great way to do this is with Google Sheets; create tabs for expenses, payments, and deductions and keep it updated religiously.
Alternately, TurboTax Self-Employed comes with a free year of QuickBooks, which means you don’t have to wast time on the logistics of tracking expenses. Instead, that time can be spent focused on growing your business.
3. Know your status. The annoying truth is that you could end up costing yourself some money if you make the mistake of choosing the wrong filing status. This is where tax software comes in handy. It’s designed to help point you in the right direction with guidance that is more specific to your situation than what Google can provide.
4. Discover your deductibles. From health insurance premiums to charitable giving, there’s a very long list of deductions that you may qualify for. Figuring it all out on your own can be hugely time-consuming, and comes with a pretty significant margin of error. Turbo Tax searches over 350 tax deductions and credits to find every tax break you qualify for so you get your maximum refund. They literally guarantee it.
5. Start early and double-check your work. The best way to blast through tax season is to start as early as possible. This gives you time to get everything in order and to deeply review your work to avoid penalties. Turbo Tax’s calculations are 100% accurate so your taxes will be done right, guaranteed, or they’ll pay you any IRS penalties.