Opening my small biz in 2012 has been tons of fun. And it's going to be even more fun next year, thanks to some great tips I picked up during tax season this year. Here's a list of the most useful things I learned as a new business owner.
- DON'T wait until the end of the calendar year to research your state sales tax guidelines. In some states (like the one I happen to reside in), small businesses are required to file quarterly. When in doubt, pick up the phone and call your state Department of Revenue. Thanks to my delayed filing for my state sales tax licensing, I became chummy with a kind clerk in the state office. Website information can be outdated but a real person can help you navigate a not-so-user-friendly system.
- DO keep a tidy spreadsheet. Thankfully, I do not rely on my website or PayPal to track my sales—neither shows the whole story. Here are some things you should be tracking on your spreadsheet:
- Gross sales
- PayPal fees
- Mileage accumulated when obtaining supplies
- Shipping costs
- Business related expenses (i.e. business cards, advertising, business lunches)
- Supply expenses
- Purchases made specifically for the business (computer paper, ink, pens, etc.)
- Gross sales made in your state (for state sales tax purposes)
- Website/domain/hosting fees
- DO calculate the square footage of your studio in relation to the rest of your house. In previous years, a designated work space was required to have walls surrounding, but open concept work space is now considered a home office. Once you figure out the percentage of square footage your studio consumes in relation to your entire domicile, take that percentage and apply it to your utility bills. Yep, it's a write-off.
- DO track the percentage of your internet/phone bill that applies to your business. Yep, it's a write-off. Huge win for this small biz owner this year! Ka-Chow!
- DON'T forget to track any special books or magazine subscriptions you may purchase for your business. Yep, they're write-offs.In the words of my fabulous accountant, ask yourself: would I be paying this fee/buying this product if not for my business? If the answer is NO, it's probably a write-off!
What are your great tax tips for new business owners?