Do You Put Money Away For Your Tax Bill?...

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My accountant is coming to see me later to let me have all my facts and figures for the end of the year before she files my return. (gulp)

As I'll have to have my tax bill (whatever it is) paid for the end of the month, I'm hoping I've salted enough away for it.

Question:_ Do you put your tax money away every month, and if not, why not. (Because it has to be paid)

Cheers
Kim
#main internet marketing discussion forum #bill #money #put #tax
  • Kim,

    To put money away in anticipation of your tax bill is great advice Kim. It's a shame that this thread probably won't get the views it deserves because anything to do with taxes is seen as not sexy.

    Well, if you were to over-estimate your daily/monthly tax bill and stash it away in a high interest account (if they exist now!), when it comes to paying the government you'd more than likely have a nice little sum left over to treat yourself with. Now that's pretty sexy.

    Peter
  • Hi Kim,

    I keep a very rough calculation in a spreadsheet of how much I am going to pay, but I don't put that exact amount in a specific account I just try to put my savings in general in a variety of places with good interest rates (getting harder these days).

    I keep the rough calculation so that I won't be in shock when I find out what the figure is and also so I have that money in a place that is easily accessible

    The good thing is that I am getting paid in US $ and as you have probably noticed as well, the recent drop in the value of the £ has meant a nice payrise.

    Cheers,
    Suzanne
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  • In Canada we have to make quarterly payments above a certain income ($30k / anum I think) so yes my taxes are all paid by the time I file - or I owe a small amount.

    I might get a refund as I invested big in Tax deferred investments (RRSP)
  • I am bracing for major problems with tax man this year....no payments have been made and I will owe a bunch plus possible penalties....Taxes are real and this tread s/b major one...
    • [1] reply
    • I pay estimated quarterly taxes, and have done for years. It's part of running a business. Not the best part, but a neccessary part unfortunately.

      Michele
      • [1] reply
  • Quarterlies are the way to go for me. I have a really good
    tax lady and she keeps me on track for everything. Self
    employed people are much more likely to get audited so it
    pays to be extra vigilant.

    Tom
  • I put money aside each time I "pay" myself (usually monthly). I put it in a money market that's making at least a little interest, then pull it out when it's time to make my quarterly tax payments.

    As a tax person, this is what I recommend my clients do as well. It helps avoid penalties, and also allows you to earn a little interest until you have to pay your estimates/tax bill.
    • [1] reply
    • I do pretty much the same thing Suzanne does, keep a rough estimate and try to make sure I have that amount in reserve. I don't do quarterly, because my inclome fluctuates, and I hate giving the government money earlier than I have to.

      My accountant rocks though, and I always wind up paying almost nothing in taxes.
      • [1] reply
  • As others have explained upthread, in the Us we have to pay estimated quarterly taxes.

    Having gone through a full IRS audit last year and coming out of it ok, I'll continue to do so.

    P.S. Audits really suck
  • Yep. Necessary evil that we all have to deal with.

    My issue is my CPA can never find enough expenses to deduct. That's the beauty and curse of IM - it's a business that can often have insanely low overhead compared to revenue.

    But as I always say to her, I'd rather have extremely low expenses than extremely low revenue.

    Ken
    • [2] replies
    • Oh I know that date Kim - 31 January!!

      I've set aside next week Monday to file mine online - usually I do it the last week of January.

      Have I got enough money to cover it? Pretty sure I do!

      Good luck for later.
    • ************************************************** ********

      I'm with you Ken. I wish I owed a million dollars a year in taxes, since my tax bill is about 1/3 of my true income. The higher the tax bill, the higher your gross revenue.

      I have a business license so I have to pay quarterly state and federal taxes. It works out really well since there is a lot less to pay at the end of the year.

      Dixie
      • [1] reply
  • Check this jsherloc:
    Self-Employed Individuals Tax Center
    • [ 1 ] Thanks
  • Gulp, I didn't even think about this. Thanks for reminding me, or else I would have been scrambling at the last minute!
    • [1] reply
    • Pete if you're in the UK, you have to have your taxes filed online by the 31st of this month

      Kim

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  • I pay my taxes in advance - every two months. My income is estimated for the year and I pay a percentage of that on a regular basis so that I won't get hit with a big bill at the end.

    Much the easiest way for me.

    Debbie
  • Why you guys pay taxes?.. I mean.. for what?
  • You bet I do!! Nothing is worse than trying to come up with money in April. It just isn't there. I take out 30% of everything and just set aside in a savings account.
  • Yeah, I pay quarterly taxes too... in the US you have to do this or you will face penalties at the end of the year.

    Taxes are horrible but they are a given....

    Chai
  • How do they know how muche ure earning from the internet?? :/
    • [2] replies
    • Interesting viewpoint.

      Stupid, but interesting.
      • [ 2 ] Thanks
    • Why don't you pay taxes in the 10th kingdom?

      If you're stupid enough to be taking money online thinking the tax man isn't going to catch up with you, then God help you when he does.
  • I get SO confused with taxes. I wish they'd do away with it already. First (a long time ago), I just filed once a year. Got a refund in most cases. LOL

    Then I started having to pay. (shocker when you're used to getting)

    Next I started having to pay quarterly.

    Now I find out I get penalized if I don't pay by the 15th of EACH month! So that's what I've been doing now for a couple of years.

    Seems the more you make the harder it gets.

    I dread tax season. I can't decide if it was better to be broke during the year and get a $4,000 return or make a lot each year and pay a lot each year.

  • We make quarterly payments. When you are self employed that's what they want.

    Lambert
  • Because, unlike people with "normal jobs" we don't have to have a pimp
    who reports all our doings to the goverment..
  • I was in credit for January as I overpaid last April

    I've been putting away 40% of whatever I withdraw towards my tax.

    Cheers,

    Anthony
  • Absolutely. I take my projected earnings and from that develop a projected tax obligation, then divide it up into 12 and each month I have an automatic transfer from my regular accounts to my tax payment account.
  • And just a reminder for folks in the U.S. who pay quarterly -- your next payment is due tomorrow (Jan 15th).
  • There are perfectly legal ways to reduce your tax obligations. My CPA is a former IRS'er.
  • Kim,

    To answer your question yes, I have a business
    reserve account and I set aside an appropriate
    amount each month.

    Secondly, there are many strategies available
    to all businesses to minimise their tax liability and
    I strongly recommend that anyone who doesn't
    have an accountant gets one!

    John
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