If you were fortunate to have made a healthy income on your business in 2016 you may be crying come April. (REMEMBER: the goal is to make money!) BUT – I hope not!
Sending in 1040 Estimates
If your business was profitable – did you send in your quarterly tax payments with the 1040-ES? (This is NOT a business tax. This is your tax obligation as an individual.)
Here is where you REALLY need to have an expert CPA guide you. By only paying your federal taxes on April 15th, you are being hit with a HUGE bill. Along with the fact that making this lump payment is a killer on your wallet, you are probably paying a penalty % for not making quarterly payments.
So… how do you avoid this in the future?
Talk to Your Tax Accountant
Sit down with your CPA (or tax accountant) and make a plan for 2017 tax payments. He or she will be able to come up with an estimated amount for you to pay each quarter. Taxes are paid from your personal finances and should be a line on your PERSONAL budget. However, if you know you’ll need to pay $5000 in taxes every 3 months, then you know you’ll need to make that much more in income.
I cannot emphasize the importance of sitting down with your CPA once a year and figuring out your tax approach. Businesses change quickly. And, as your business income changes, you need a trusted tax professional to help you plan for the tax implications.
Make an appointment with your CPA now for 2017 tax planning.
Wanna read more about this? See what the IRS has to say here.