As a new guy in the window cleaning business I have a few questions. Did you guys start doing your taxes your first year in business? As a 1st year college student I haven’t had to really deal with taxes and know very little about them (shoutout to the public education for teaching me about the important things in life haha). Many people in this business and in other fields of self employment have told me not to worry about tracking expenses, filing taxes, etc. as a new guy, even if I were to make more than the minimum amount required to file self employment taxes. These people have told me to first focus on growing and making money in the business and worry about those things later once I understand more. Any recommendations? Also as a new guy would you recommend me getting some type of insurance? (I would be trying to find work mostly in local shops and strip malls) Should I take the step of legitimizing my business by becoming an LLC or sole proprietorship? This would be a part time job outside of school so not sure I should take it that far yet. Any advice, info, or recommendations would be greatly appreciated. I have been doing about 5 hours of research on the window cleaning business for probably 2-3 weeks but still stuck on these questions. Thanks in advance guys
Taxes are pretty easy to deal with. Just add whatever sales tax your state may have at the bottom of every invoice. For example, if your state sales tax is 6% simply add 6 cents for every dollar you charge. So on a $100 dollar bill you’ll times that by .06 for a grand total of $106. Just have a line on your invoices for the sub-total,tax, and grand total. You can get them made pretty cheaply as any print shop.
Federal taxes are another beast so I suggest consulting an accountant to see how much to put away for your quarterly payments. You gotta learn to be good at saving that’s for sure.
Where you located?
I don’t think it’s ever a good idea to “not worry” about taxes. From a legitimate standpoint, you should pay them. As far as sales tax goes, you’ll need to file for a permit. I know this sounds crazy, but some states do not require sales tax on commercial window cleaning. The easiest way to find out what happens in your state is to check with an accountant. Don’t go to H&R Block or some place like that. Talk to an actual accountant. We put it off for a year or two and just tried to navigate it on our own. When we finally went to an accountant, we found out it was well worth the cost.
Definitely go to a CPA. Yes, it costs money, but certain expenses are just part of running a business and are necessary. You wanna know for sure that this stuff is absolutely right.
A little tip: multiply every single thing you earn by 0.3. Put that money aside (separate account, or at least a sub-account in your bookkeeping software). You should always have what you need saved up come tax time. Basically treat it like it was never your money (cause, technically, it’s not… It’s Uncle Sam’s). I do the same for Sales and Use tax. I set it aside immediately so i have the exact amount ready when it comes time to pay.
Yes, get insurance. When the exposure you are getting from your small accounts blossoms into an opportunity to bid on a money making account you want to be able to say in the beginning that you are licensed and insured.
Incorporating costs a bit more to establish than being a sole proprietor but you will retain more of your revenue, so it pays off in the long run.
TurboTax really simplifies the tax preparation and submission process.
With the sales tax, would I keep that money separated? Like should I treat the 6$ as the government’s? If so how does the state receive that money? During tax time every year?
Any idea where to look for good insurance? Also what’s the range that it could cost?
Taxation is Theft!
What state are you in?
Look. Online. Call your state department of revenue and ask them how to proceed.
You don’t absolutely need to keep it separated but be sure to save the amount for payment either quarterly or monthly depending on how often the dept. Of revenue requires you to file. You may be able to simply call a number, add a bank acct, enter the numbers, and pay the bill.
Doing this stuff really isn’t that complicated. But like everything else in business and life, there’s steps that need to be taken in order to proceed properly.
Good luck with your new venture. I hope it treats you well.
That’s a knee-jerk over-simplification. Taxes provide many good things.
Whose head is on the coin?
I recommend doing business with a local office. You might get referrals. I replaced the window smearers at my insurance office and I do the 12 panes monthly.
To not worry about taxes should not be in your thoughts as a business owner.
This will always catch up yo you, when it does penalties will be added.
No one likes taxes but it is part of process for a business to survive long-term. Yes you can start without, charge less rates with low overhead but what happens when you decide to go legit and find the prices you have been charging no longer cover your costs of a legit business.