Taxes & 4 ways to make them easier

Taxes & 4 ways to make them easier

Here’s a confession: I never wanted to start my own business. I did it out of necessity as it was the only way to reach my goals and still make somewhat of an income. Thankfully, I’ve learned from my mistakes (ahem, paying thousands of dollars back to the government because I didn’t realize I was a business owner) and picked up helpful tips along the way. It is my mission to help every new business owner, or MT taking on a non-employee contract or client, not make the same mistakes I’ve made. 

Below you’ll find my top 4 ways to tackle the overwhelm that is taxes and make things manageable for myself and my small business (just one of me here!).

4 ways to MAKE TAXES EASIER

1 - Track your income

This is simple and straightforward, but there’s a hidden benefit to tracking your income. You can figure out EXACTLY (give or take whatever the government wants to change in a given year) how much money you’ll owe at tax time. To be safe, I set aside 30% of each check or cash payment I receive for music therapy services throughout the year (or 30% of my yearly income). This ensures that even if I track zero expenses for the year, I’ll still be able to give the government what they’re looking to collect during tax time. They tax a percentage of my income and it’s my job to know how much and be ready for it. 

2 - Track your expenses

This is the most important thing I learned after my big mistake of 2015 [when we had to pay thousands of dollars back to the government]. There are so many things we spend money on for our businesses, for the work we do day in and day out, and the government is willing to pay us some (or a lot) of that back! I didn’t think this was real until I started getting nice checks back at tax time. This is all relative, of course, against your income made and how much the IRS wants from you. However, one of the best things you can do is keep track of every small, seemingly insignificant purchase you make that has anything to do with your business to balance it all out. 

3 - Track your mileage

Do you even know how valuable this is?! I’m talking value in the form of money. Miles for money, if you will! At the time I’m writing this, the IRS is paying 56 cents per mile [driven for business use]. Their words, not mine. They will pay you for the miles you drive for your business. So, if you have a session, track the miles you drive from your office (my bedroom in my case since that’s where my office lives) to your music therapy session, or business meeting, or to Target to pick up a new planner for your work, or a coaching meeting over tea with Kim 😉, AND BACK. Whatever amount of miles you drive related to your business, the IRS is paying back 56 cents. If I’m doing math correctly, that means you get $56 for every 100 miles you drive. If you drive to your clients like I do, the miles (and money) add up! 

4 - Work with an accountant 

I’ve learned from my accountant, that I’ve worked with for the past 4-5 years, that the rules are ever-changing. One year you could get more money back from this, or the government will want more money for that. It’s confusing for everyone involved, and at the end of the day we all do the best we can. One thing that’s helped me have peace of mind when navigating tax season is working with an accountant. Tax forms are notoriously confusing for the average person, and there are a lot of things we miss if we aren’t informed of what goes where. That’s where the professionals come into play! I pay my accountant (friend of a friend who runs her accounting out of her home) $200 a year for one visit to “prepare” our taxes. I give her all of my detailed spreadsheets and she makes sense out of them, asking me questions and clarifying along the way. To give you an idea of the range of accountants, I’m looking into working with another accountant who charges $800 for tax prep AND financial support and planning. He would walk me through financial things throughout the year, help me setup systems that work for me and my business, and help me organize my finances in a way that supports my lifestyle. By the way, these 2 accountants are amazing and I’d gladly give you their contact info if you’re local to Rochester, NY. In my opinion and experience, it is well worth any money it costs to pay an accountant for their professional services around money and the confusing world of taxes.

I didn’t realize how much I had to say about taxes, but here I am spitting it out! Hope you’ve found something helpful in these tips. These 4 things have literally saved me thousands of dollars over the years. I suppose I made back the money I lost from 2015 - haha!

Because of my experience with the daunting journey of filling taxes as a business owner, I have felt the need to help out my fellow music therapist. I DON’T WANT YOU MAKING THE SAME MISTAKES I MADE! And so, I’ve put together a simple version of the spreadsheets listed above for you to buy if you think it’ll be helpful. You can definitely create these on your own, but it does take a bit of time. I’ve worked on these the past 5 years and finally feel confident passing them along! They have served me well throughout my years of business and filing taxes. They have formulas already made, columns and rows simply organized, and the peace of mind that you have something to bring with you when you meet with your accountant during tax time. Find them here: resources for you.

Good luck in your work and in your business. Don’t hesitate to reach out!

You’re also welcome to sign up for a coaching call if you want some 1:1 time to talk about this stuff! You got this!