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Let’s face it, money matters – especially when you’re running your own show. But the thing is…the world of finances and taxes can get confusing. And if the recent tax season gave you any indication, as early as possible is the best time to get started on your tax planning for next year.

Whether you’re a seasoned entrepreneur or just starting your business journey, managing money doesn’t have to be daunting. We’re breaking down some key strategies to help you take control of your finances and make savvy tax decisions.

💰 Tip #1: Separate Business and Personal Finances

Imagine your business as your best friend. You may love them dearly, but you wouldn’t mix your personal finances with theirs, right? It’s the same thing when it comes to your business and personal finances. Open dedicated business bank accounts and credit cards. This not only keeps your finances transparent but also simplifies tax filing. When tax time rolls around, you’ll thank yourself for the organized records!

💰 Tip #2: Embrace Budgeting

Budgeting is your financial roadmap to success. Track every penny in and every penny out. There are fantastic budgeting apps available to help you categorize and analyze your spending. By staying on top of your budget, you can identify areas where you can cut costs or allocate resources more efficiently, ultimately maximizing your business’s financial health.

💰 Tip #3: Understand Your Financial Numbers

Don’t let financial statements intimidate you! Understanding numbers like profit and loss reports empowers you to make informed decisions for your business. There are plenty of online courses and workshops designed specifically to break down financial jargon for entrepreneurs. Take advantage of these resources to boost your financial literacy and gain confidence in managing your business finances.

💰 Tip #4: Automate Your Finances

Take advantage of technology to streamline your financial tasks. Schedule recurring payments and set up bill reminders to avoid late fees and keep your cash flow healthy. Automation not only saves you time but also helps you stay on top of your financial obligations, preventing any nasty surprises down the road.

When it comes to taxes, making smart decisions can really pay off. When you know how to navigate the tax landscape, you can make the most of deductions, cut down on what you owe, steer clear of penalties, and even boost your retirement savings. 

With 162 million individuals paying taxes, it’s all about keeping more of your money in your pocket. By making savvy tax moves, you’re not just saving cash, you’re also ensuring your financial security and peace of mind in the long run. So, where to begin? 

The first thing is knowing which taxes you have to pay. The IRS has a list of business taxes you need to pay. Here’s a quick rundown:

🏦 Income Tax – Every business has to file an income tax return, except for partnerships. It’s essential to figure out which form matches your business type.

🏦 Estimated Taxes – You pay taxes on your income throughout the year, not just at tax time. It’s called estimated tax, and it’s pretty straightforward.

🏦 Self-Employment Tax – If you work for yourself, you’ll need to pay self-employment tax, which covers Social Security and Medicare. It’s like paying into your own benefits fund.

🏦Employment Taxes – If you have employees, you’ve got to handle employment taxes, like social security, Medicare, federal income tax withholding, and federal unemployment tax.

🏦Excise Tax – This one applies to specific products, services, or transactions. Just know which forms you need based on what your business does.

Finally – before you start planning – here are the 5 tax terms you need to know. And, here are a few things to keep in mind while doing so:

🪙 Standard deduction vs. itemizing

Understand your options based on your financial situation. Most people opt for the standard deduction, so get to know the rates that apply (these may change every year).

🪙 SALT cap rate

Be aware of the limit on deducting state and local taxes, as it may impact your tax strategy.

🪙 Avoiding penalties

Pay attention to deadlines and make sure to file your taxes on time to avoid penalties, which can add up quickly.

Taking charge of your finances is the first step to getting ready to thrive. Remember, financial literacy is a superpower that anyone can attain, and these wise words about money can help you get started on the right track. 

Need some more guidance? Book a session with a Selfmade mentor today! 

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