It’s that time of year when all of America starts to get themselves prepared for filing their taxes. As independent contractors/ Virtual Assistants/Self employed individuals, we all need to get our expenses and receipts in preparation for filing season. For those of us who have been at this for a while we would have already got our books in order, sorted our receipts as the year went on, and by now just finishing up the last quarter or month of the previous year. For those who are new to being independent contractors then the advice is simple, every thing you earned in 2014 needs to be included in your income. Any expenses that you incurred during the last year in relation to your business or providing your service as an independent contractor, then those are your expenses.
Income in fairly pretty easy to define, it is always any payments you received from providing your service to others. Expenses on the other hand can get a little complicated as sometimes we tend to mix some business expenses with our personal. For future reference the best way to avoid mixing the two is if you solely use one particular account such as a bank account, PayPal account or whatever for strictly business purposes. In doing so you are then able to clearly see what your expense use is for the year, and it will be a lot easier for you to get your annual report for your taxes when everything is kept in one place.
If you’re not able to get this all done by yourself then look for a bookkeeper to help with getting your books in order, or take the whole lot to your tax account. Which ever you choose make sure that all your information is together so that you’re not running around looking for misplaced receipts or expenses.
And even if you’re not located in the United States, it is always a good idea to do your bookkeeping so that you can keep track of what you’ve spend and made over the 12 month period. It’s no good selling a service if you don’t know how profitable it is.
Happy tax season.