January Deadlines for Self-Employed
Did 2021 slip away? How are your books looking now that we’re getting close to the end of the year? Several of you have reached out to me to say ‘hey, it's almost 2022 but I never really did anything for 2021. What should I do? I'm a year behind.’
So, I thought that I would give you guys a list of things that I need you to get done between now and the time that you turn over your work to your tax preparer, accountant, whoever it is that does your tax return.
First, you’ll need to close out 2021.
What does that mean? Well, for those of you who have not done any work on your books in 2021, you need to pull out all of your bank statements from January through December. If you don't have them, go online to your online banking or call your bank and get a printout of those.
Now if you're a check writer, make sure that your bank is getting images of checks if you do not get the check register. That way you can categorize these checks. So, categorize your expenses and your income - that's going to be the very first thing that you need to do.
And if you have a subscription to QuickBooks Online, that's great. That is probably my absolute favorite paid platform. If you do not have a subscription to QBO and don’t want to pay for it each month, you can always download my Calculated Tax Planner (which costs less than just one month of QBO) and that is going to give you a breakdown of your income and your expenses for the year. It doesn't have all the fancy bells and whistles that QBO does, but it will give you everything that you need for an accurate tax return when you go to file.
I actually had someone reach out to me, and she said ‘You know, I usually just give everything to my tax preparer at the end of the year - all my receipts, bank statements, and they just go through it and they figure it out.’ Guys, that's not the way that you should be doing your work. You should be doing this on at least a quarterly basis so that you can make educated calculated decisions for your business.
So, she downloaded the Calculated Tax Planner, and within a few hours, she had all of 2021 categorized. She actually sent it to me today and said it was so simple, and it made her feel good that she took ownership of something. She's in a creative market, so numbers mean nothing to her, but she was able to grasp her numbers, finally! She said, “Wow, I'm actually spending this amount of money in this category every month and these are some places that I could actually cut expenses.” And, if you're not doing this on a regular basis, you don't know where to cut expenses. A year later is too late!
Make sure if you're using QBO, and you're importing those transactions, and you're categorizing, you still need to reconcile your bank statements every month. You would be surprised by the errors that I have seen in bank statements and categorizations.
I also want you to start keeping up with receipts. Don’t just toss them in a box - scan your receipts. It’s super easy on an iPhone. Take a photo or screenshot, put it in a Google Drive folder, and then keep a paper copy as well. If you are audited, a QBO spreadsheet, my spreadsheet, or a doodle on a piece of paper is not going to cover it. You have to have receipts in order to prove your deductions.
Next thing is to keep up with your mileage.
It's too late to make a mileage log for 2021, but it's not too late to get started on the right foot for 2022. All you need is your odometer reading as of January 1st of 2022.
Whatever vehicle you're using for business, write down that odometer reading or take a picture of it and send it to that Google Drive. And then as you are making business trips, again, record those things. Maybe make a mileage spreadsheet where you can quickly pop that info into throughout the year.
January Deadlines
January is a pretty busy month with deadlines, and the reason for that is because it's a quarterly tax month.
On the 17th, your payroll taxes are due.
Usually, the due date is the 15th, but you get a few extra days since the 15th falls on a weekend!
So when you are an employer and you deduct taxes out of your employees’ paychecks, you have to pay those in on a monthly and quarterly basis. January is a quarterly month so you have a few more to pay than normal, but those are due on the 15th of the month.
If you are an employer with payroll, you also have a few other ones coming up.
And then also your W-2s are due to your employees by January 31stt, which means you have to have the mail to them or hand-delivered or processed in whatever way by January 31st. They don't have to have received them by January 31st, but you have to get them out of your hands and in the process of going to them by January 31st.
Your Estimated Tax Payments Are Also Due On The 17th
Again, we get a few extra days since the 15th falls on a weekend this year.
If you are self-employed and you are making a profit, you are responsible for making estimated tax payments - they're not an option.
Some people will tell you, ‘Oh, it's your option if you want to pay them all at one time or if you want to break it up…’ it's not an option. If you're not making estimated tax payments, then you're paying a penalty for not doing this on a quarterly basis. If you have any questions about those, send me a message and I can help you with that.
1099 Filings are Due by January 31st
If you have anyone who you had paid more than $600 in your business, or you have real estate rental income and you have paid someone to do any work for you that is not on payroll, you are responsible for giving them a 1099 at the end of the year.
Again, these are not optional. You must provide them with a 1099 NEC if you don't want to be penalized. There is a new form this year so if you're one who is a DIYer and you like to do things yourself, you got to get the new forms - no longer the 1099 Miscellaneous, you now have to use a 1099 NEC.
If you’re ready to bring in support for staying on top of your books and have your taxes done by a pro - contact us today so we can explore your options!
