One of the most confusing things you'll ever do in life is fill out your taxes. You'll have to understand how to do things like, "calculate the total from form b line 12 and subtract the difference between line 17a on form 13-a and the second sum from line 34d on form 17-6." It's enough to make you cry.
If you think doing individual taxes is tough, try doing them as a home business. Every year they add more tax laws, which makes it more confusing than ever to do them. If you run a home business, taxes, not just paying them but preparing them, are an essential part of your operating costs. If you don't handle your taxes, your otherwise successful business can quickly go up in smoke.
Many people these days are doing their taxes as "sole proprietors." This means, as far as the government is concerned, they run their business just like they would a lemonade stand. It's no incorporated, it's not an L.L.C., and it doesn't register any employees. If you are just starting out with your business, and you are running it by yourself or with a family member, then a sole proprietor is likely the easiest, and cheapest way to run it from a tax perspective.
More than anything, you've got to keep detailed records of everything. All transactions and expenses must be recorded. It can be helpful to get some accounting software, and learn some basic accounting rules. This will help you to keep track of things so you don't get in over your head.
You also need to know what you can and can't deduct. Generally speaking, if you are a sole proprietor, you can deduct quite a few business expenses. Depending on who you have prepare your taxes, this can get pretty creative. And knowing ahead of time what you can write off will have an impact on what kind of capital equipment you purchase. Of course, if you use anything, like a home computer, for both business and personal use, you can partially write it off.
You definitely need to hire a professional, unless your hobby is accounting, and you love to read vaguely defined rules that will put the ordinary human into an instantaneous and deep slumber. Getting a professional will save you a lot of time, and maybe even a lot of money, as they know exactly what kinds of things to look for.
Like it or not, doing taxes is a part of life, and an even bigger part of running a home business. So long as you stay on top of things, and get a professional to help, you should be fine.
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