Here’s the deal – you gotta pay taxes, and you gotta prepare for tax season so you’re not caught off guard.
If you have set your business up as an LLC, you’ll want to pay quarterly estimated taxes. The IRS likes their money, and they like it early.
Work with an accountant, even for just a single call, to ensure your business is set up correctly and you are estimating your taxes properly.
What’s worked for me is saving 15% of “real revenue”, meaning the revenue the business brings in after I pay contractors and the costs of producing the product I create.
Then I divide that estimated number by 4 and pay that amount when quarterly estimated taxes are due.
Even then, I always save 15% in a tax account and save it until tax time. Some years I end up with more in that account which makes for a nice bonus. Other years I owe more than I paid in estimated payments, and it’s nice to have that amount just sitting there.
The business also takes care of any personal taxes I may owe, which is one nice thing about having a separate entity rather than using your personal business account(s) to run your business.
Since taxes could end up being thousands (or tens of thousands) of dollars each year, it’s worth taking the time to prepare properly to pay them in full each year.
@darentsmith | daren.blog