Filing your taxes as a self-employed person can be tricky, especially if you're new to it. Misfiling your taxes can lead to unwanted consequences, such as audits, insufficient payment, overpayment, and more. If you're a sole proprietor, you can protect yourself by hiring a professional to prepare your taxes. Here are four reasons to hire a tax professional to help you:
1. Receive all the deductions that you're entitled to.
Deductions allow you to deduct certain business expenses from your taxable income. This ensures that you don't end up paying more taxes than you owe. Expenses related to your business are deductible, such as supplies and programs used to create your products and services. If you work from home and have a home office, you can even deduct the portion of your internet and electric bills that enable your business activities. A self-employment tax preparer will help you claim all the deductibles that you can.
2. Calculate your quarterly payments.
People who are self-employed need to pay their own taxes since they don't have an employer to automatically withhold tax payments. Most sole proprietors are required to make quarterly payments to the IRS. If you're not sure how to calculate your quarterly payments, a tax preparer can help you. They will calculate the amount you owe based on past years' earnings and the amount you're likely to make in the following year. Having a professional help you with this step can make it easier to make an accurate estimate.
3. Ensure that you pay all the taxes you owe.
Making a mistake on your taxes can have large consequences. Underpayment of your taxes can lead to additional fees, which can add up to large amounts. If you're audited and the IRS finds that your taxes are incorrect, you may even get into legal trouble. A self-employed tax preparation expert will keep you out of trouble and give you peace of mind.
4. Save yourself time and money.
Some people use tax preparation software to file their taxes on their own. This option may be sufficient for people working for hourly wages. However, sole proprietor taxes are often more complicated. Using a tax program to file self-employment taxes can get confusing and time-consuming. It can even get expensive since most tax preparation software charges extra for self-employment taxes. You can save yourself time and money by asking a professional tax preparer to help you with your taxes instead.
Contact a company like Eneyvel's Financial to learn more.