You are all excited, finally you will be able to achieve financial independence and throw off the chains of your day job. Things are going great you are making tons of money and life couldn’t be better. Then along comes Big Brother Government to remind you that your big dreams come at a price. A huge tax bill.
Taxes, one of the two things you are guaranteed to experience in life. Unlike death, taxes gets to be experienced over and over until you die. Fortunately there are a few things you can do to make sure your first tax bill doesn’t give you a heart attack and a chance at the other guarantee of life.
The number one way to make sure taxes doesn’t kill you is to prepare for it. The government usually wants between 25 and 50% of your earnings. This is basically the largest expense you will ever face, even a mortgage payment has a hard time getting close to the enormous amounts of money the government takes from your pockets.
So, how do you plan for taxes? The first thing I try to do at the beginning of a new year is estimate how much money I think I might make this year. I’ve never been that good at picking an accurate number but I have found that I usually over estimate my earnings which has been helpful in providing myself with an annual “refund” check from myself. By having a hopefully accurate picture of how much you are going to make in course of a year you can start preparing for tax time when the government is going to try to make you part with a size-able chunk of that money.
The next step would be to open a secondary savings account or some type of guarenteed investment account so that you can start putting away the tax portion of your earnings. Remember that this must be placed in a very secure account, nothing is worse than planning and prepairing for your taxes to have a little market bump wipe out the governments money. The tax man just isn’t very forgiving.
After you have a secure account in which to store your taxes, you need to figure out how much you will be forced to part with. This can usually be calculated quite easily online. Just find an online tax calculator and enter in a few details to find out how much you will need to put away.
Now with all those steps complete you can relax and while the vast amount of money the government takes from your pockets will never really stop amazing you at least the risk of a heart attack is limited to your health and not a huge bill.
What are your opinions? What other steps would you recommend a new business owner take to prepare themselves?