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6 Steps for a Stress Free Tax Season

January 30, 2012

By Carol Amato

It’s tax season again, and I want to make sure my readers are prepared.  Today, I’m going to go over the steps you need to take in order to prepare for taxes.  Make sure you follow these steps so you can have a stress free tax season.

6 Steps for a Stress Free Tax Season  image

Are You Following These 6 Steps for a Stress Free Tax Season?

Step 1 – Get Your Books in Order

Bookkeeping is an essential aspect of running your own business.  You have to account for every bit of money received and spent. 

There are lots of programs that make bookkeeping easy.  QuickBooks Pro is one such program.  QuickBooks Pro is incredibly easy to use, and it allows users to create reports that can be exported to their accountants.  Additionally, it allows business owners to understand how much they are actually earning each month, quarter and year.

6 Steps for a Stress Free Tax Season imagesQuickBooks Pro costs $229.95.  You can purchase the program at http://quickbooksonline.intuit.com/.

The free version at http://www.nchsoftware.com/accounting/index.html.

If you don’t want to spend the money on accounting software, you can consider using Express Accounts Accounting Software.  There is a free version of this software available for small businesses that have fewer than five employees. 

Once you download your software, input all of your financial information and transactions.  If you paid someone, put it in the software.  If someone paid you, put it in the software.  Also, put all subcontractor data and bank account information into the program.  Then, you can move down to the next step.

Step 2 – Get Organized

While most people never get audited, it’s still important that you’re prepared just in case the IRS decides to check your taxes.  Thus, you need to keep all of your receipts throughout the year.  Additionally, you should hold on to those receipts for three years after you file the taxes.

It’s a good idea to keep all your receipts in a file.  The file should include receipts for:

  • Any computers or devices you purchased for your business
  • Ink, paper and other supplies
  • Your work related mileage

Basically, you need to get a receipt for every work related expense, no matter how big or small.  Then, you need to put the amount of the expense into your accounting software and save the receipt.

Now let’s move down to the next step.

Step 3 – Measure Your Office

You have one more step to complete before you can file your taxes.  You need to measure your office.  In most cases, you can deduct office space, but you need to have an accurate measurement.  Get out the tape measure and determine how many square feet your home office is.  Then, move down to the next step.

Step 4 – File Your Taxes

If your business made more than $400, you’ll need to file your taxes.  You have two options for this.  One, you can file them on your own.  I do not recommend this.  Business taxes are more complex than personal taxes are, so it’s really worth spending money on an accountant.  However, if you decide to take care of your taxes yourself, I recommend that you get some software that will make the process easier.  TurboTax is a great program for filing businesses taxes.  This is just one of the countless programs available.

If you choose to go to an accountant, create a file from your bookkeeping software, print it out and take it with you.  Then, sit down with your accountant and answer any questions he has.  After that, he’ll be able to do your taxes for you.

Step 5 – Pay or Set up a Payment Plan

Once your taxes are filed, you’ll have two options.  You can pay the balance in full, or you can set up a payment plan.  If you have the money, I highly recommend that you pay in full.  Otherwise, you’ll have to pay interest and penalties. 

That being said, there might be times when you simply cannot pay the bill in full.  If that’s the case, you can sign up for a payment plan.  It’s not difficult to get approved for a payment plan.  Simply go to http://www.irs.gov/individuals/article/0,,id=243335,00.html and apply for an installment agreement.

6 Steps for a Stress Free Tax Season graphic

Step 6 – Make Estimated Tax Payments

You’ll get a little break after you pay your taxes, but then you’ll need to start making your estimated tax payments for the new tax season.  You need to make these payments four times a year.  Before you can make the payment, you have to come up with an estimate for the amount you owe. 

You only have to make estimated tax payments if you expect to pay more than $1,000 in taxes for the year.  If you owe more than $1,000 and you fail to make estimated tax payments, the IRS will charge you interest and penalties.

You can find all of the information you need on estimated taxes at http://www.irs.gov/businesses/small/article/0,,id=110413,00.html.  Go through the document to find out what type of form you’ll need to fill out and how you can determine your estimated tax amount.

6 Steps for a Stress Free Tax Season pictureKeep these steps in mind as you prepare for tax season.  Also, remember that tax preparation is a year long process.  Keep up with your bookkeeping duties and send those estimated tax payments into the IRS! 

Hope to help. 

Take Care,
Carol





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  • Stacey McNeill

    Thanks for the great tips and step-by-step instructions, Carol. I so appreciate this information! I have to admit that the whole tax process is one of my stumbling blocks when it comes to moving forward with my business. Would love to see more on the logistics and legalities of having your own home-based business.

    Best regards,
    Stacey

    • http://www.CarolAmato.com/ Carol Amato

      Hi Stacey,

      You’re welcome, glad I could help. I do understand where you’re coming from. Not one of my favorite topics, ugh! lol

      Yeah, logistics and legalities of taxes related to home businesses, way outside of my expertise. If I find a good resource, will pass it on!
      Thanks for stopping by. – Carol

  • Andrea

    Hi Carl- Great information! Thanks a bunch.
    Andrea

    • http://www.CarolAmato.com/ Carol Amato

      You’re welcome, Andrea – glad to help! Have a great rest of the week. :)
      Take Care,
      – Carol

  • Lee Morgan

    Thanks Carol
    Love how you always look at the bright side. Taxes are not hard to do, just keeping track of things you need is my problem.
    Thanks for a great post and info!!

    Lee

    • http://www.CarolAmato.com/ Carol Amato

      Hi Lee!

      Yeah, keeping a system for saving the necessary info is tedious but all too important! :) I’ve suffered in years past from not giving attention to detail.
      Glad you enjoyed the post. :)
      – Carol

  • Kenny Holt

    Thanks as always for the tips and that great lift you give me with that poitive attittude. I don’t know how many times that I have said,”I am ready to go at making money at the internet game”. This next month it is going to happen or not at all. You would laugh if you saw all of the notes I have taken. I know if it wasn’t for you I would have drop the ball.

    THANK YOU !!!
    kENNY

    • http://www.CarolAmato.com/ Carol Amato

      Hi Kenny,

      You’re welcome, I really try to stay positive even about the things I don’t like. Can’t avoid taxes, so go with the flow, ya know? :)
      I would not laugh at your notes, have notebook after notebook of notes myself! If you have any specific questions, please let me know.
      Have a great day.
      – Carol

  • Dennis Ward

    Carol, Thanks for this Information. I have not made any money, so I’m not showing that I have a business in 2011.

    Dennis

    • http://www.CarolAmato.com/ Carol Amato

      Hello Dennis,

      Well, maybe you don’t have to file, but this is just the beginning. Have a system set up to keep receipts, etc. for when you do show an income. Each state is different. Let me know if there is anything I can help you with! Hope you have a great day.
      – Carol

  • aida suarez

    Thank you Carol for this blog on How to get ready to pay the yearly income taxes. Very clear, and very good information! Refering to my previous writing (complainig about this and that)… i got to tell you i appreciate your opinions. Now i am more calm and relaxed. Great teacher! I can see you’re a very positive person. But Aida on that area has a chip on the shoulders, because i very well konow I do not “always look at the bright side of things” And probably it is why the road has been very bump it to me. But I pray about it and also try to be thankful for what i have. Probably in 6 months or so i will know if I can cut the cake dealing with this business. So far i am also having fun learning new things with Eric and now Naveed, and Don, Oh! Ah! Now, Hey Kenny Holt good luck! You’re a delightful guy! Tell us more as you keep making progress. And also, do not forget to pray.

    • http://www.CarolAmato.com/ Carol Amato

      Hi Aida!

      You’re welcome, you know how much I enjoy trying to bring information that will help. Yeah, Kenny is a good guy!
      Have a great blog post coming out Friday night…so stay tuned for that. :)
      Have a good evening and take care of yourself,
      God bless you,
      Carol

  • cesar duarte

    hi carol cesar the book i bougth is advertising profits from home next week i gonna buy my website and sniper book can you give me any clue where to star to make money thank you god bless you and family

    • http://www.CarolAmato.com/ Carol Amato

      Hi Cesar,

      I don’t recommend you “buy” a website. I will be emailing you detailed information about what steps I took and in what order. Look in your Inbox.
      Have a great weekend. :)
      – Carol

  • Virgil Cooper

    Hi, Carol,

    Thanks for your Blogs. This is a subject I know a lot about. You should take the time to read the book “Income Tax: Shattering the Myths” by Dave Champion (2010). You can order a copy at http://www.taxrevolt.us. Dave Champion uncovers the TRUTH about the federal income tax and the IRS layer by layer by layer. He does an outstanding job. When you finish reading his book, you will have a completely different outlook on life and on the carefully crafted propaganda put out by the IRS. You will have a heightened sense of freedom and liberty. You will understand the income tax from TWO viewpoints. The IRS only presents one viewpoint — that of Americans involved in revenue taxable activities. Thanks again for all the helpful information you share and for the Blogs you post. Best regards, Virgil

    • http://www.CarolAmato.com/ Carol Amato

      Hello Virgil,

      I’ll have to check that out – I appreciate you bringing it to my attention.
      Have a great day.
      – Carol

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