Let me be clear that when I refer to birth in this piece – I am referring to the birth of a new business. Also that I may have fudged up on my taxes. Not enough to cripple me, but quite enough to anger me, frustrated me, and ponder if the American Dream is even real anymore.
I knew it would hurt. But – wow. Ouch.
What makes me the most mad is that I did all of my research before going solo, and I’ve been keeping meticulous books all through the year. I even switched from one reputable accounting program (I got some trust issues halfway through the year) to another, more expensive one.
And I still owe.
I STILL owe.
A little bit more than I was expecting. Even though I put away the recommended amount.
Here’s what I learned, so you can maybe avoid this:
- Accounting software bases all your forthcoming quarterly taxes on the first quarter. Ergo; if you change accounting software in the middle of the year, it then thinks that you will be making nothing during the year. That means it will prompt you to pay $0 quarterly. Luckily, my personal research into this subject warned me to put away about a third of my earnings to pay these taxes. I was prepared – for the most part. This also counts for if you quit your job right after the Christmas holidays (hell to the yes I did, I earned all of those higher education break holidays through the year and no one was going to take them away from me).
- In all of my research, they never mentioned bring married to a moneymaker. Seriously. All of these freelancers spouting their great, super awesome hard earned tax advice never once mentioned what I find myself dealing with. My husband is the breadwinner in this house. Always has been. When we met, he was working on his PhD, so, yeah, his career was going to go way farther than mine ever will. This was part of the path that led me to working for myself: more flexibility for the family we would one day start. So guess what I learned this morning? I was supposed to input all of his income so that it could affect the tax level of my business. Guess what that means? I now have to double my rates to my clients to be able to afford the taxes – which is based on BOTH our incomes, not just standalone for my business – and pull in the amount of money I need to cover my part of household expenses. This now means that a portion of my clientele, small businesses and non-profits, possibly won’t be able to afford me anymore. This was probably the most upsetting news. For a second I considered divorce. But only for a second; because I could never get the amazing health insurance he has through his work on my own.
- People who design accounting software get “import information” and “export information” confused. This can lead to you not knowing you can really simplify things. I won’t name names, but it was really fucking annoying to enter all of my items in for the year and then discovering I could have saved three hours of my time by an import/export function. If you can’t find tips on “importing data”, then try the help term “exporting data”.
- God Bless Texas. Seriously. Damn. This state kicks ass when it comes to messy additional taxes. It keeps it simple. There’s such beauty in that.
