Being a sole-prop is amazing. You may be able to work from home, take breaks to walk your dog and spend all day watching 62 episodes of Reign on Netflix without having to lie to your boss about being sick. #winning. The disadvantage, of course, is that you have to tracking your own shit, which is tedious and annoying and also confusing.
Here’s some tax myths that we’re going to bust so you don’t get eff’d at tax time:
- Coffee can always be deducted
If you work out of a coffee shop your daily cup of java is on you. But if you take out a client for a meeting you can deduct it as a meal expense. Make sure to write on the receipt the name and number of the client and the reason for meeting.
- Receipts are good enough
Those thin waxy pieces of paper you keep stuffed in a box under your bed? Not good enough! They yellow, the ink fades and you’re left with an illegible mess that no auditor will be able to accept. Back up every paper copy with a digital copy. Either take a picture of the receipt with your phone or scan it. Spend a day every year creating a spreadsheet with your expenses and a small Jpeg of the corresponding receipt.
- You’ll have enough at the end of the year to pay your taxes
No you won’t! Not if you don’t plan for it. Every paycheque you receive you need to set aside 15%-30% of your income in a separate account. Otherwise you’re going to be fooled by your inflated bank balance and forget that it’s money owed to the government and spend it on fancy sharpies (or sushi, or a vacation or whatever floats your boat)
Want to learn more about not to get eff’d at tax time? Check our course:
This is a MEGA resource and life-saver for tax time preparations.
WHEN YOU TAKE THIS COURSE YOU WILL KNOW:
- The % of your earnings you should squirrel away for tax time
- How to reduce the amount of income taxes owing at tax time
- How to separate business expenses from personal expenses
- The different business expense categories how they work
- What receipts you need to be keeping