When you file self employed w2 or 1099 forms, you need to make sure you know the guidelines. When it comes to taxes, the most expensive fees you could pay could be from your unintended mistakes. Avoid the following common tax errors to keep yourself in good standing – and in the black.
Not Knowing Which Form to Submit
Starting up a new business requires you to prepare yourself in different ways. When it comes to juggling the responsibilities, filing taxes can quickly become confusing. Similarly, filing taxes as an employee differs greatly from doing it as a business owner. If you decide to do it alone, you should invest in tax software to avoid any avoidable errors.
Not Keeping Track of Expenses and Income
The best way to save yourself time and money is by writing down everything. As you prepare self employed w2 or 1099 paperwork, you do not want to forget any details. Make sure to put notes in one place. For instance, avoid using random post-its. Keep a notebook or create a spreadsheet to list all of your income and expenses. By also keeping receipts, you will find it easier to take advantage of tax breaks.
Not Fully Utilizing Incorporation
Even if you run a small business, make sure to consider incorporation. In some cases, staying a sole proprietor may benefit your business the most. Still, explore your options and what it would mean to incorporate your business. Doing so will help you insulate your assets, as well as your personal finances. If you choose to incorporate, self employed w2 or 1099 workers can further avoid paying the self-employment tax.
Missing Your Deductions
Many self-employed people make the common mistake of missing deductions. Rather than paying more than necessary, do your research ahead of time. Try to take advantage of all possible tax breaks. Some commonly overlooked tax-deductible items include: Internet and phone service, office equipment, advertising, entertainment expenses when you recruit new clients, and travel costs.
Not Setting Aside Enough Money for Taxes
If you classify your business as a sole proprietorship, you will need to pay the self-employment tax. If you do not properly prepare, fulfilling that tax obligation will become a rude awakening. Keep in mind that although you can deduct half of your self-employment tax, you must still pay it. Do not postpone these preparations. Failure to prepare will only lead to business pains later.
How Can AMS Software Help?
As you file self employed w2 or 1099 forms, consider your business’s unique software needs. Our accounting software lets users prepare year-end tax forms with our W-2/1099 Forms Filer. You can also use our Software Generated Forms. The forms benefit new self-employed individuals by flattening the learning curve.
You will also save money by not having to purchase pre-printed forms or paying an employee to manually align your forms. Perhaps most importantly, our add-on module makes filing quicker. By using our E-Filer, you can submit your forms directly to the IRS or SSA each year.