# Tax Guide for Solo Sole Proprietor?



## RMDailey (Nov 22, 2016)

2016 was my first year of running my own business full-time. I have a little experience with self-employment taxes from my dad and my time as a Youth Minister. 

I'm a sole proprietor. I've tracked all my milage, have good records of tool purchases, material costs, payments received, etc. I've been putting back money every month for taxes and my wife's job has been withholding as if she were single without Kids. 

I plan on using Turbo Tax, I've been using it for years and honestly feel I know more about my tax situation than H&R block. So what books, articles, and tips do you recommend to minimize the amount of theft...I mean taxes I have to pay? 

Thanks


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## Bambamm511 (Jan 29, 2014)

Hire a good accountant. They make you money.

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## Golden view (Feb 16, 2012)

It sounds like your situation is pretty simple. Turbotax would probably take care of things in an hour.


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## KAP (Feb 19, 2011)

Hire an accountant... not only is the fee tax-deductible, but they can find areas where you may not have considered... additionally, if there were ever an audit, you're in a much stronger position... think of it as insurance...

I'm sure you can find a youtube video about your situation, but so could most of our customers, but they're not experts in our field right even though they may be weekend warriors and not familiar with all the pitfalls? Things change from year to year and it's an accountants job to stay on top of those changes...

If you have all your numbers in line, it's not going to cost you much...


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## Calidecks (Nov 19, 2011)

RMDailey said:


> 2016 was my first year of running my own business full-time. I have a little experience with self-employment taxes from my dad and my time as a Youth Minister.
> 
> 
> 
> ...




My Father who was a contractor, instilled in me the importance of spending good money on good professionals. They will save you many times more than their cost. Lawyers, accountants, bookkeeper, etc.


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## Warren (Feb 19, 2005)

You should be all right doing that yourself. I did all of mine up until about 2 years ago. Once you start adding in employees, it gets to be a bit much to handle. I never had much luck with Turbo Tax for my business. By the time I had it figured out, I could have done the whole thing by hand.


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## Philament (Dec 9, 2014)

It's going to sound like an echo chamber in here, but find a good accountant who deals with contractors. My father is a retired accountant and he said the same thing to me. Even though it's easy enough to do when you first start out, they know all the changes in regulations and write offs that you may never think about or know. They're also excellent advisers to have as your business grows, knowing how to deal with pay roll, which kind and when to make big purchases. I can't even count the number of time's I've called mine when contemplating different business plans or ideas. 

Even though they can't talk about other people's business details explicitly, having managed the books for a number of different contractors, they know what works, what doesn't, what will get you in hot water, and what to watch out for. 

Rules might be different there, but here, WHEN you get audited, they can represent you which can alleviate a lot of stress.


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## Calidecks (Nov 19, 2011)

QuickBooks is a good start.


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## FrankSmith (Feb 21, 2013)

A good accountant not only helps you sleep well at night, they help get your taxes reduced by knowing what you can claim. More importantly as you work with them over a longer period of time they will help you implement business concepts that will benefit you come tax time year after year.


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## NYgutterguy (Mar 3, 2014)

In 25 years I've never ever attempted to do my own taxes or even write out a pay check. My job is to sell and hang as many feet of gutter as his possible. Let the pros do what they do. $1000 a year for my accountant is a steal. 


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## Calidecks (Nov 19, 2011)

My accountant told me washing my vehicles or anything like that makes no sense. That time spent on doing what I do best is much more valuable. Get others to do that crap.


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## EthanB (Sep 28, 2011)

Accountant. Turbotax and HRblock are for W2 folks with no kids/deductions/investments.


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## Windycity (Oct 3, 2015)

NYgutterguy said:


> In 25 years I've never ever attempted to do my own taxes or even write out a pay check. My job is to sell and hang as many feet of gutter as his possible. Let the pros do what they do. $1000 a year for my accountant is a steal.
> 
> 
> Sent from my iPhone using Tapatalk




I agree, plus they are constantly changing the tax codes and accountants full time job is to stay up to date with that stuff. I'm with you there are certain things that makes a lot more sense to pay a professional to do. I'm a mason contractor that's what I excel at, not dealing with taxes. 


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## SectorSecurity (Nov 26, 2013)

Any of you guys care to share what you are paying for your accountant / book keeper?

I know this will vary widely just curious.

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## Golden view (Feb 16, 2012)

$45 an hour, $1500 a year or so. I use QB and only do invoices and some minor bookkeeping, plus enter hours for my employee.


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## builditguy (Nov 10, 2013)

I also hire an accountant. Always have. I recommend it. As said above, they know their job. 
Not only will the make sure everything is done correctly, they will get you set up for the upcoming year.

For example:
_"I'm a sole proprietor. I've tracked all my milage, have good records of tool purchases, material costs, payments received, etc. I've been putting back money every month for taxes and my wife's job has been withholding as if she were single without Kids. "_

You tracked mileage. Is that the best way, or is deducting the actual cost the best way, for you? 
You put back money every month. Did you put back enough? Do you realize you have to pay your own social security? This is an area I see guys miss alot. When I was starting out, I held back 33% to pay taxes. It always came out about right.
Also, did you make your estimated tax payments? Doesn't sound like it. My accountant fills out the vouchers and gives them to me at the beginning of the year. When tax time rolls around all I have to to is stick it in an envelope with a check.
I realize I could probably do most of it myself, but why. If they do it, I know it's right. It's better that I spend my time on what I know and hire a professional to do what I don't know.

Don't forget, if you didn't make estimated tax payments, you have to pay interest on the money you didn't pay the government.

I drop my stuff off at the accountant every month. They do everything for me and provide a report, every month. At the end of the year, they have everything they need. I don't have to take anything to them, for the business. My taxes are already done for the year. I pay $140 a month, plus I pay a fee for them to do my yearly taxes and submit them.
There may be someone cheaper, but I'm not looking for the lowest bidder.


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## Windycity (Oct 3, 2015)

builditguy said:


> I also hire an accountant. Always have. I recommend it. As said above, they know their job.
> Not only will the make sure everything is done correctly, they will get you set up for the upcoming year.
> 
> For example:
> ...




Yes the SS amount trips alot of people up especially people that work as an independent contractors...i even know people that drive for uber (considered independent contractors) for extra income and get a sticker shock at tax time because they don't understand that you dont just pay the standard SS tax as you would if you work for an employer, its double 

You ask how much we pay an accountant usually they charge you by the hour and it all depends on how big of a business you have. If you have several employees with a lot of income and a lot of overhead obviously it's gonna cost you more money. If you are a one-man operation with minimal overhead, expenses and cost then it probably won't cost you more than a couple hundred dollars a year. Plus you said you're a soul proprietor which makes taxes even easier so it should not take an accountant a whole Lotta time


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## RMDailey (Nov 22, 2016)

Thanks for all the feedback. I'll start looking around for an accountant. 


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## JB Ryan (Feb 11, 2017)

Personally, I would go with a Turbo Tax type of filing. I have been using them for years and they really do walk you through the process. When you start getting bigger, into LLC or Inc. territory with more employees and more everything, then I would use an accountant. But not as a sole-proprietor......but that's just me.


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## builditguy (Nov 10, 2013)

I've never used Turbo tax. It may be great, I wouldn't know. I have a question though.

Does Turbo tax tell you how much extra interest you need to pay the government, because you didn't make estimated tax payments? (Because I'll bet this guy didn't.)

Does Turbo tax tell you how much estimated tax payments you need to make, in the coming year? Do they print off Vouchers for you?

I'm not looking for areas that Turbo tax may be lacking, because I just don't know those things. I figure someone that uses it would know.


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## Warren (Feb 19, 2005)

builditguy said:


> I've never used Turbo tax. It may be great, I wouldn't know. I have a question though.
> 
> Does Turbo tax tell you how much extra interest you need to pay the government, because you didn't make estimated tax payments? (Because I'll bet this guy didn't.)
> 
> ...


I have not used it for many years, but i am pretty certain it does those things. Even doing your taxes manually it is pretty easy to do that.


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## Ohio painter (Dec 4, 2011)

I agree with hiring professionals, I paint. My accountant does my payroll for three employees and taxes and answered the many questions I have throughout the year. I pay about $1200 a year.


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## RMDailey (Nov 22, 2016)

builditguy said:


> I've never used Turbo tax. It may be great, I wouldn't know. I have a question though.
> 
> Does Turbo tax tell you how much extra interest you need to pay the government, because you didn't make estimated tax payments? (Because I'll bet this guy didn't.)
> 
> ...


I didn't pay in quarterly. It's like a $50 penalty for me. I've used Turbo Tax for many years and it can do all those things mentioned. I do see the advantage of have a dedicated pro, but I'm so small...is it worth it?

I don't have employees, I don't deal with subcontractors. I do handyman and custom carpentry dealing directly with homeowners. I hired some high school and college kids to help me out on a big job during the summer but I just paid them cash. My GROSS was under $80k, I may break 100K total this next year. 

I "own" a glorified job that may one day be a 2-3 employee business. But I definitely hear the resounding "hire a pro" voice and am seeking out knowledgable (Not H&R Block) tax pros. But I may just go ahead and use TT this year. I've already bought it, so I may do both and see the difference for myself.


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## JulianJohn (May 5, 2021)

Well, 2020 was the first year of running my own business full-time, what a time yeah?! The easiest period for an inexperienced young guy, that knows nothing about taxes and how to manage a freaking entire business. Thankfully, my dad's accountant is still working with us, and she helped me a lot actually. If it was not for her, I think I would have destroyed the entire business! The worst part of being an entrepreneur, from my point of view are the taxes, the tax system and the the tax forms, well basically everything that is related to taxes. I mean, the system is soooooo annoying, and a lot of taxes are pointless. Right now, I have to complete the 1040 form, and honestly, I do not understand why we need this one! Thankfully, I can edit it directly on 1040 Form Instructions 📝 How to Fill Out IRS Tax Form 1040 2019: Guide, Printable PDF Instructions and use the samples from the same website.


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