If this is the first year you have owned your own window cleaning company, you might be nervous about tax season. Self-employment taxes are completely different than standard taxes, or what you will soon know as “easy tax returns.” There are a lot of extra forms involved along the way, but they are relatively simple to fill out in the long run. You just have to be prepared for the extra work that lies ahead. Here are some tax tips that explain what to expect from self-employment taxes your first time around.
Unless you pay estimated tax installments for your window cleaning company, chances are you will owe money to the government this year. When you work for someone else, the company is in charge of collecting taxes from employees and paying a portion of their taxes every year. When you are self-employed though, this is all up to you to cover. Most people do not prepare for this early on, so they end up with a big bill to cover at the end of the year.
In a later set of tax tips, we will discuss the importance of paying estimated quarterly installments to avoid owing money on your taxes, but for now, don’t make any plans to spend your tax refund.
Most window cleaners are shocked to see how much money they made the previous year. Even a new window company can pull in a lot of money in a short period of time as long as they have a good business strategy to abide by. Don’t be shocked if your income for the year adds up to a lot more than you initially realized. That is just a sign of your accomplishments.
Despite the instructions that the IRS provides for their tax forms, they can be a little challenging to sift through. If you have questions about your taxes, you can call the IRS or stop by your local IRS office, if you have one. You may also speak to a tax accountant in your area, but you will probably have to pay a high fee for that service. Try to do everything you can on your own to avoid excessive expenses.
Stay tuned for Part 3 of our self-employed tax guide for new window cleaning companies, where you will learn how to pay off your tax debt.