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.
Software for Small Businesses
Running a business is not for the faint-hearted. Luckily, there are several options for software for small businesses that can make it easier. From managing people to procedures, we know there is a lot to keep track of. Quite frankly, it can almost be impossible for entrepreneurs to totally stay on top of things – no matter how small the business is.
According to research, the average business owner spends about 68% of their time working and handling day-to-day business operations. In comparison, the remaining 32% of the time goes into strategic business planning and scaling their business. This is why many small businesses find it challenging to grow, and several others may eventually fail.
When you have the right tools, you will be able to effectively manage your business, improve processes and boost overall performance. For example, you can automate accounting, hiring, marketing, client management and more.
Here’s a list of some of the best software tools that small businesses can use for essential daily operational activities.
1. Best Enterprise Resource Planning (ERP) Software: Microsoft Dynamics 365 Business Central
The Microsoft Dynamics 365 Business Central is an all-in-one ERP software that a company can use to manage significant business processes, improve customer relations and enhance business development. This solution allows small and medium-sized businesses to connect and unify their finance, operations, sales and customer service teams.
In other words, the tool can help companies sync interdepartmental operations and help teams work smarter to deliver results.
- Unified reporting across departments.
- Improved efficiency.
- Saves time and cost.
- Cloud storage and data security.
- Easy user interface.
- High setup cost.
- Limited data storage.
- Possible downtime.
2. Best Bookkeeping Software: Wave Accounting
Wave Accounting helps businesses keep track of their cash flow by connecting their bank accounts and credit cards to the software. Companies with multiple bank accounts and businesses can also use Wave to track income and expenses from all accounts.
The software also organizes payments, creates and sends branded invoices and generates financial reports.
- Free and secure accounting and invoicing.
- Seamless reporting for taxes.
- Unlimited income and expense tracking.
- Can connect multiple bank accounts and business credit cards.
- Unlimited users.
- Live chat support only (no phone support).
- No extra functionality like inventory management.
3. Best Point of Sale (POS) Software: Square
Square POS offers an all-in-one point of sale service that businesses can use to sell their products and services in person or online. Whether you run a brick-and-mortar restaurant business, have an e-commerce market for your retail store or both, you can use Square POS to oversee your sales from anywhere in the world.
In other words, with Square POS, businesses can take customers’ orders, accept payments for products and services and synchronize transactions from all their sales channels. Usually, you can start with the free option, but you must subscribe to the paid option for the best experience.
- Integrated payment processing.
- Free online sales option.
- Easy to use.
- Seamless inventory tracking.
- High processing fees for high-volume transactions.
- Free option has limited uses.
4. Best Email Marketing Software: MailChimp
MailChimp has a free email marketing software to help business owners get started with email marketing. The marketing tool comes with ready-to-use email templates, signup forms, opt-in pop-ups, etc. Users can also personalize their experience with branded emails and run analytics or view campaign performance with the built-in analytics tool.
The exciting thing about MailChimp is its free plan is one that small businesses can enjoy or test before opting for the paid option.
- Free plan available.
- Behavior-based automation.
- Email marketing and newsletter samples and templates.
- Abandoned cart messages (for e-commerce businesses).
- Easy to use and customize.
- Accounts can be cancelled or suspended.
- Free plan has limited access.
5. Best Communication Software: Slack
Slack is an internal communication tool that companies can use to achieve timely and effective communication among their team members. The software offers instant, real-time messaging, collaboration and feedback. Users can also create channels and teams to communicate separately to specific team members or project stakeholders.
Additionally, it offers cloud storage, file sharing, meeting scheduling and integrations for video calls all in one place.
- Comes with a free plan.
- Easy collaboration and integration.
- Cloud storage.
- Automated meetings and scheduling.
- Easy to use and personalize.
- Many activities can happen at the same time. Users may find it hard to keep track of these activities.
- Its push notifications can be a distraction.
Today, businesses use software to manage and carry out different tasks. As an entrepreneur, you need to stay on top of things, but you can save time and cost by streamlining processes while focusing on other essential aspects of the business, like scaling.
There are software tools for small businesses designed for this purpose. Some of them come with free plans to save cost while you need to pay for others. However, to determine which software is best for your business, you need to identify your peculiar needs and the problems you are trying to solve. Ultimately, you will have a highly efficient and productive company that is ready to grow.