There are a few different ways you can pay your Federal taxes: mail (yuck), online through Direct Pay (doesn't require you to set up an account), and EFTPS (requires an account, but has extra perks).
We're going to talk about EFTPS today.
What is EFTPS?
EFTPS or Electronic Federal Tax Payment System (say that 5 times fast) is a free service provided by the United States Department of the Treasury that allows taxpayers to put together a tax payment either by telephone or online. But seriously, who uses the phone when there's an online option? This system is accessible every day of the week, 24 hours a day - unlike the IRS call centers.
This system can be utilized by individuals or corporations seeking to make payments on income taxes. The main benefit is the convenience of making a secure payment at a scheduled time.
Do I need an account on EFTPS?
You are not required to enroll in EFTPS, but there is a perk we'll discuss below.
Even if I'm...
Beauty school only teaches you so much. It's important to keep to keep up your skills by taking courses, which can often lead to fun travel opportunities. Maybe it feels a little like cheating to be able to go to San Diego and learn the latest balayage techniques while also dipping your toes in the sand. So what's business versus personal and how can you deduct as much as possible?
First, let's talk about the things you can deduct assuming you are performing business activities every day of your trip.
As long as the primary purpose of your trip is for business, your flights are deductible. If you use points, then your cost is zero and there is no deduction. Pro tip: save your points for a fully personal vacation.
Uber, Lyft or taxi
Any transportation you have to take during your trip is also deductible as long as it's for business. This could include traveling between the airport and your hotel or between your hotel and the work location.
The Advance Child Tax Credit Portal has finally arrived and I'm going to walk you through every step. If you have questions about what the Advance Child Tax Credit is and if you qualify, check out my prior blog post covering all the details.
The IRS will begin issuing the Advance Child Tax Credits on July 15th. If you do not wish to receive them, you must opt out. See below for step by step guides on how to do that.
You should opt out if you have a child under the age of 18 and expect your 2021 income to be higher than the following thresholds:
Married Filing Jointly: $150,000
Head of Household: $112,500
For the opt out to be granted, you need to have it processed 3 days before the first Thursday of the month. That's June 27, 2021 if you don't want any payments. If you missed that deadline, you will receive the first advance, but can still opt out of all future payments.
Once you opt out, it is permanent. You cannot opt back in.
How Much Do You Make?
Sheesh, accountants are always asking the most invasive questions! Whenever I ask people how much they made last year, without fail, they tell me their revenue number. I understand why. It's easy to figure out, feels more impressive and you worked hard for it.
But here's the thing. If you are not keeping the money, are you really making it? Here begins the dance between revenue and profit.
What is Revenue?
Revenue, sometimes called income or sales, is the amount of money your clients pay your for services and product. When you are looking at a profit & loss statement, this is the very first number listed, which is why it gets the nickname "Top Line Revenue."
Having a large revenue number can make you feel really proud. You should be. Creating a revenue generating business is hard work. But it's also not the full story.
What is Profit?
Profit is what is left over after you have paid all your expenses. Profit is what you pay taxes on. Profit after...
Kids. They are cutest sweetest little things. And also, really expensive.
In March 2021 a new stimulus bill was passed. Part of that bill included the Additional Child Tax Credit Advance. Before we talk about the advance, we should talk about the regular child tax credit. The child tax credit has taken on many different forms, but most recently it's been a $2,000 payment per child up to 3 children. Part of the pandemic relief includes changing the amount of child tax credit. In 2021, instead of $2,000 per child, families can receive up to $3,600 for children under 6 and $3,000 for children from 6 to 17 years old.
Normally the child tax credit is a big windfall on the tax return. For 2021, Congress is trying something different. Instead of having to wait until 2022 to claim the entire amount on your tax return, they are going to make partial payments during 2021.
When Will the Payments Be Made?
Payments will be made monthly between July and December 2021, with the first...
What Are Estimated Taxes?
Hold up, business owners have to file taxes quarterly?
Well, sort of. The technicality is you’re not “filing” (keyword) taxes every quarter. Instead, the IRS requires business owners to make estimated tax payments every quarter of the year instead of all at once at the same time. Why? Is the IRS that greedy? *cough* yes *cough*. But in actuality, it probably helps save your bacon more than hurts you. I’ve seen (too many times) businesses that haven’t made big enough quarterly payments (and spent the money in the year), only to find themselves in a bit of a pickle come filing season. We don’t want that.
Note that you’ll also likely need to make quarterly tax payments to your state governments as well. These vary by state, so google “[your state] + estimated tax payment” for your specific situation.
Do I need to pay Estimated Taxes? What Happens if I Don’t Pay Estimated Taxes??
There are lots of things to consider when it comes to registering your business as an LLC or an S-Corp. Today I’m breaking down the simple facts about both LLCs and S-Corps so that you’re better prepared to make the best decision for your business.
What’s so great about being an LLC?
As a beauty professional, you can choose to file as a Limited Liability Company (LLC) with your state. This makes your company a legal entity, registered with a legal name, and protected from certain threats that non-legal entities do not have. Filing as an LLC gives you, the business owner, personal protection from lawsuits and creditors trying to take your hard-earned money. These issues remain at the business level and do not affect you on an individual level. That means things like your personal bank account or house are kept safe should anything go awry with your business.
It also makes filing taxes simple.
If you are a single owner LLC, your business taxes can...
Because of the nature of your job - serving clients in your salon - you may not have thought you could qualify for a Home Office deduction on your taxes. But I have good news for you: in your current set-up, you may be able to use a Home Office deduction on your tax return! Read on to find out how to qualify, as well as situations in which you cannot use this handy deduction.
I do all of my business in my salon. How can I claim a Home Office deduction?
Almost all of your business takes place in your salon. You serve clients, support employees, and take payments there. But where do you do your bookkeeping? Where do you place orders for supplies? Where do you do your social media marketing?
The qualifications for a standard Home Office deduction state that:
It's been a whirlwind of a year with a new tax law passing every few months and 2021 is shaking out to be no different. Luckily, every law that has passed has been so helpful for small business owners and we're so excited to share with you the changes in this law.
We have a new round of economic impact payments being sent beginning March 17, 2021. They're functioning the same as last year’s two rounds of stimulus payments, except with bigger payments. Each individual and dependent on a tax return is receiving $1,400. Unlike the first round of stimulus, all dependents are eligible for this payment, regardless of age.
For single taxpayers, the payment will begin to phase out when your adjusted gross income (AGI) is $75,000. For married taxpayers who file jointly, the phaseout will begin at an AGI of $150,000. And for heads of household (single parents), the phaseout begins at an AGI of $112,500.
The IRS will use 2019 AGI to...
Every new business owner is so excited to be able to deduct car expenses when they open their business. I know exactly what all the gurus on Tik Tok are telling you. But I have to give it to you straight. Beauty business owners usually have limited mileage they can deduct for tax purposes. It's not that you can't take a mileage deduction. That's not what I'm saying at all. What I am saying is that the deduction isn't as large as most beauty professionals are hoping. BUT in 2020 you may have done one particular thing differently that could change that! Read on to find out more. Today we’ll dig into whether Standard or Actual mileage is better for your situation, and how to easily track your mileage for a deduction.
What kind of miles are deductible for me?
Alrighty, first of all, in case there was any confusion: personal miles driven are not deductible. That much should be obvious, but to clarify, this means any driving you did, even in a...