It's a Team's Life

Are You Ready?

Are You Ready?

It is that time of year again. The dreaded tax season is upon us. Are you ready? What do you do to prepare? Does your preparation happen throughout the year? Or does your preparation look more like receipts thrown into a shoe box and given to your accountant to sort out? Whichever method you prefer, have you been in contact with your accountant to have your business taxes prepared?

In all honesty, March 15 comes up on me when I least expect it. While I keep track of our numbers diligently throughout the year, I still forget that I need to be home to get the 1099’s and bank or investment statements that the accountant needs in order to complete our business taxes in a timely manner. Not to mention the documents needed to complete our personal taxes which are due on April 15.

This brings another thought to mind…

How is your business set up? Is your business set up as a sole proprietorship? Maybe your business is set up as a S-Corp? This makes a big difference as to how the money you earn is taxed.

In the beginning of our business, we were set up as a sole proprietorship. Despite the fact that both Dave and I wanted to be 50/50 owners in our business our accountant still set us up in this way. Over time I asked that the accountant change our business designation to a S-Corp; however, he kept dragging his feet. What did I do? I found an accountant that would do what I wanted. 

There are advantages for a business to be a sole proprietorship. The main advantage for us was that we did not have to do payroll. That is one area of accounting in which I have zero experience. Instead, we could take profits from the business to pay for our personal expenses. This is called “owner’s draw.”

At some point, it became obvious to us that we needed to change our business designation to a S-Corp. The business was making more money which is a good thing; however, to avoid paying more in taxes we needed to find more expenses to write off. Paying us a salary, is a write off as a business expense. This helps to lower our net revenue on our business tax return.

Please do not take this as sound tax advice. I encourage everyone reading this to contact your accountant to determine what is best for you in your business and situation. I am not a licensed accountant. I am a truck driver.

Tax time is always a good time to evaluate how your business is going and if changes need to be made in how it is run or how it is set up.

Wishing you millions of safe, profitable and TAX FEE miles!

Kelly Plumb