It's Not Fun, but It Has to be Done Benjamin Franklin wrote a 1789 letter that states, “But in this world nothing can be said to be certain, except death and taxes.” Even at the United States’ early beginnings, federal taxes were a necessary evil to fund various public projects and administrative costs. Today, federal taxes serve much of the same purpose. While virtually no one likes to prepare and file their taxes, it is a necessity if you want to avoid fines and further hassle. It is no secret that preparing and filing your taxes is notoriously complicated. Many people lament that it should not be so difficult to pay the government. However, some of the complications allow people to save money if they discover specific tax benefits. Knowing how to file your own taxes may be a good option if your tax situation is relatively straightforward, or if you are willing to learn the process. Why Do You Need to File Your Taxes Every Year? The short answer is that federal law requires that most individuals file taxes annually. Income taxes are assessed every year based on your income earned during that period. You then pay a percentage of that income to the government, less any deductions, adjustments, or credits that you qualify to receive. If you do not file (and pay) your taxes, then you may be assessed penalties and interest. The Internal Revenue Service (IRS) can even go as far as garnishing your wages and repossessing your property if you do not file and pay as required. The Benefits of Filing Your Own Taxes If you are one of the 43% of Americans that are doing your own taxes, you are certainly not alone. Roughly 53 million people prepared and filed their own taxes in 2018. There are many benefits to filing your own taxes, including: Saving money: Hiring a tax professional is expensive, and many people can prepare and file their returns on their own, completely free of charge. Control: Some people like knowing the exact information that is included in their return and being able to control the data, and for some, knowing precisely how the numbers work out, is comforting. Gain helpful information: When you prepare your taxes, you can see what items saved you money this year or which issues you should address so you can save money next year. While filing your own taxes is complicated, it can be beneficial under the right circumstances. There are several programs online that walk you through the process to help ensure you are taking advantage of all of your available deductions and credits. The Drawbacks of Filing Your Own Taxes In addition to the benefits, there are also some disadvantages to filing your own taxes. These include: Time and effort: Preparing and filing your taxes takes time and work You have to sift through financial information and deal with concepts that you may not understand well. The process can be frustrating and take a considerable amount of time. Error risk: If you do not completely understand how your taxes work, you run the risk of making a mistake because of misconceptions. If that happens, it could lead to underpayment and audits down the road. Questions: Even if you use a tax preparation software, you may still have questions that will remain unanswered unless you do significant research or reach out to a tax professional. For some people, the risk of having a substantial error that triggers the IRS’s attention is enough to scare them away from preparing their own taxes. Preparing for Filing Your Taxes When you begin work on your taxes, you should have information gathered throughout the year. Some of the most common items that you will need include: Social Security numbers for you, your spouse, and any dependents Information about wages, such as W2s or 1099s Investment income information Documents that represent any other source of income Information regarding adjustments to income, such as student loan interest paid, IRA contributions, and health savings account contributions, just to name a few Information regarding potential credits, including, for example, child care expenses, education expenses, or retirement savings contributions Data about any tax payments that you may have made throughout the year Keeping good records will help make tax preparation easier at the beginning of the year. [youmaylike] The Basics About What You Can Claim When Filing You must pay income taxes on all your income earned throughout the year. However, that income is reduced by a few things. The further you can reduce your taxable income, the less you tax you will pay. There are three general categories of tax reduction methods: Standard or Itemized Deductions Everyone can claim either the standard or itemized deductions. Standard deductions are a set amount that is based on your filing status. Itemized deductions are based on actual expenses that you incurred throughout the year. You can choose to use the higher deduction. The higher the deduction, the less tax you will have to pay on your income because your income decreases on paper. Itemized deductions include things like medical expenses, state and local tax payments, and home mortgage interest deductions. Itemized deductions will only decrease your income by a certain percentage, or up to a specific point. Adjustments Some adjustments to your income may also be available. These include things like paying student loan interest or alimony. Adjustments are more valuable compared to deductions because they decrease your income dollar for dollar. Credits A credit decreases your taxable income as well. Some credits are refundable while others are not. For example, you get a child tax credit simply for having children that qualify for that credit, but that credit will not be paid out to you if you do not have any tax obligations. On the other hand, the Earned Income Credit, which is available for low-income filers, will be refunded to you even if you do not owe any taxes. There are a wide variety of deductions and credits available. Take a look at the federal forms and related schedules to determine whether you might qualify for any of these. How to File Your Own Taxes If You Live Overseas If you earned income in the United States as a U.S. citizen or resident alien, you likely need to pay taxes on that income. This is true even if you live overseas. You can still choose to e-file or mail your tax return to the IRS once you have it prepared, just as if you physically lived in the United States. In some cases, you will be taxed on the income that you earned throughout the world. However, you may be able to deduct a portion or all of the revenue that was not made in the United States in some circumstances. Filing Online The IRS offers an online filing option that is free for individuals that have an adjusted gross income below a specific threshold. Generally, your income must be below $66,000 to qualify for this service. You can also file online by using a commercial tax preparation software. Examples of this type of software include: H&R Block TurboTax TaxCut TaxSlayer There are many programs available that will file your taxes for you, often for a fee. Knowing how to file your own taxes can be a great way to save money, but it can be tricky as well. If you want to file your taxes yourself, be sure to read the form instructions thoroughly and get familiar with various tax saving opportunities before you begin preparing your return.
Funding to Aid Your Business
It is no secret that on average female small business owners have been getting less financing than their male counterparts. Luckily, the public has realized this and there are more and more funding resources for women who own small businesses. Among these resources include grant programs for female-led businesses.
Is a Grant Right for Your Business?
Small businesses have various financing options, ranging in size and time-frame. These options include:
- Credit cards and small business loans
- Larger bank loans
- Financing from friends and family
- Private equity and venture capital funding
The above funding options will normally require you to pay back the loan with interest or other related costs.
A grant, on the other hand, does not need to be paid back at all. Instead, the related costs of these programs usually include the work involved to apply for one.
Small Business Grant Programs for Women
Grants are often introduced as a way to encourage certain innovations, industries and, in our case, women-owned businesses.
The following programs support female business owners:
- Cartier Women’s Initiative Awards ($30,000 to $100,000)
- Eileen Fisher Women’s Business Grant (Various)
- Amber Grant for Women Business Owners ($2,000 to $25,000)
- Girlboss Foundation ($15,000)
- Startup Runway ($5,000 to $10,000)
- Tory Burch Foundation ($5,000)
- Open Meadows Award (up to $2,000)
Other small business grants for women are listed on general grant sites such as a grants.gov.
How to Apply for a Small Business Grant for Women
Small business grants are listed publicly and can amass thousands of applicants. As of 2018, four in ten American businesses are women-owned. That is why opting for a small business grant specifically geared toward women can drastically improve your chances of success.
1. Check Your Eligibility
Aside from being a female-led business, there can be additional requirements depending on the grant. Among other requirements, the Cartier Women’s Initiative Award requires your business to be:
- For-profit, early-stage
- Aligned to the United Nations’ Sustainable Development Goal
The Girlboss Foundation grant will only select a small business that is in the design, fashion, music or arts industry.
Some programs do have strict eligibility requirements, requiring a full business plan. Others, such as the Amber Grant for Women Business Owners, only ask that you are passionate about your business, which you most likely are!
2. Understand What You Need for the Grant Application
Each grant has a unique application process. Usually, the higher the award, the more work is required. Most of the organizations will publish the application outline as a separate file or allow you to save your progress as you complete it.
The application process for small business grants will commonly include the following.
Product or Service Overview
The judge should be informed of what your business offers within the first 30 seconds of reading your grant application. This section may come in the form of a general question, such as, "Tell us about your business," or may ask for a detailed overview of your product offerings.
A market analysis should describe how attractive the market (your industry) is, who your competitors are, and how you intend to make your product successful. It is key to convince the judge that the market is large enough for good commercial success.
You will also need to describe why your product or service will offer consumers something different and more valuable than what is already on the market.
Grants should only be one element of your total financing strategy alongside future revenue and other funding. You should be able to illustrate the costs and revenue of your small business for the next three to five years.
Your financial model should be realistic and based on the market research you have done. Your financial model will continue to develop over time. Therefore, you should use available information to build an optimistic, but still research-backed, prediction.
Traction means proof that consumers will purchase your product or service. Inform the judge of how the market has responded to your small business. Have you made any sales yet? If not, have you conducted market studies and surveys to gauge the interest of your target customers?
3. Perfect Your Application as Needed
Grants are competitive to get, like with any other type of funding. Perhaps even more so, since it is "free" money. So how do you stand out from the crowd? By submitted an application that:
- Is relevant to the grant's requirements and mission
- Effectively highlights the problem, how your small business solves that problem and why people will pay for that solution
- Highlights the passion and drive you and your diverse team have
Depending on the grant, applications can end up being a lot of work to create. If you are a sole founder, make sure you dedicate enough time to perfect your application. Otherwise, it would only end up as a waste of time to apply with a generic submission.
If you have a team, it may be wise to have someone dedicated to writing the applications.
4. Making the Most of Your Small Business Grant
If you are able to secure a small business grant for your female-led venture, congratulations! Since there is a funding gap for female-run small businesses, you might be able to get increased media attention.
Have material ready that describes your small business, the grant you were awarded and how this grant will help you grow your business. If your story gets picked up by the press, this will help you get brand exposure and effectively free marketing.
5. Spreading the Word to Your Fellow Female Founders
Finally, pass it forward! Help other female founders get small business grants by spreading the word. Inform others of how you found the right grant, along with application tips and advice.