Hi! I have been starting a small business (microgreens, aka sprout cousins if that helps) It has been so much fun and I’ve learned a lot, but I obviously know very little about business.
I know kind of what taxes are, but have NO idea how to do them. My state doesn’t have sales tax which is all I know. I’ve been keeping okay track of everything I am buying and making.
But is anyone willing to make a step by step on how to do taxes? I COMPLETELY understand if not, because I know how much that would be. I tried looking on the Small business government website and a few other places but there is just so much jargon that I don’t understand (it’s above my reading level AND I don’t know lots of jargon)
I also have gotten an LLC and business license but am just stuck from there. I’m worried i’m going to do something wrong and will end up in jail, or owe a BUNCH of money. What if I’m missing something else big?
HR block is on sale right now for $40 on Amazon but as a kid I’d see an Accountant
All the above advice of getting a bookkeeper is good advice. I am just chiming in here to say, you will not go to jail over this as long as you take care of it. Even if you did owe a lot of back taxes (which I am sure you do not as you just got started), the IRS will help you set up a payment plan based on the amount of income your business has. It is of course better to pay it off as soon as possible because they do charge interest, so if you are only making the minimum payments, it cantake forever and end up being more expensive.
I use a tax accountant. Worth every penny. Tax paperwork makes my head head explode. I prepare everything and give him a 1 page spreadsheet of my income and expenses. Put it together in an envelope of paperwork and drop it off. I go in sign, and write a check and done. It’s easier since he also handles my payroll, so he already has all that stuff. I have more problems with the hoops they make you jump through than writing the checks
Find out how much money a tax proffesional wants to be paid to help you. Maybe get three estimates.
Turn this into a yearly cost, then divide that cost by the number of units you will sell in a year.
Raise your price per unit by double this cost.
I own an M&A Company and also provide startup consulting services. I have an entrepreneurship program I administer at local high schools too. Would love to talk more about your business. Certainly DM me. No charge ofc!
Pay a bookkeeper. It’s totally worth it.
Keep in mind that being self-employed means your FICA: Social Security payment is double what an employee pays. Add income tax, and I would suggest taking roughly 50% of every dollar you take in and holding it for the government.
You DO NOT want to get behind on taxes.
Children should find ways to study hard instead of doing business
Assholes should find ways to shut their damn mouth or stop their fingers instead of belittling strangers on the internet
You’re not going to go to jail. Like the others said talk to a cpa in your area. It sounds like you’re on the right track and willing to seek out information you will be ok.
Is there a SCORE / SBA office near you? They may be able to help explain stuff and then get you hooked up with a bookkeeper. That’ll keep you out of trouble and help you understand a bit why the bookkeeper is helpful.
Ah, for a moment I thought you were under the impression that they will recommend or otherwise put someone in touch with a bookkeeper. SBA is a great resource and many people are not aware of the mentoring opportunity. This is probably a good place for OP to start.
‘Get you hooked up with a bookkeeper’?
Thanks for pointing that out: I could have been more clear!
The Small Biz Association has a mentor program called SCORE and they often can help find other local small businesses to connect with, such as a bookkeeper. Their main function is mentorship, guidance, and education on various aspects of small business ownership, such as understanding the basics of accounting and business taxes.
You’ll definitely want to get some help from a CPA or someone familiar with business taxes.
Microgreens are great, but be very careful if selling them for edible use as there are a ton of food safety regulations that come into play!
not having state sales tax makes things easier. The best route for paying taxes will probably be quarterly payments to the IRS (that’s what I do). But overall - the single best advice that you can have would be to make an appointment and sit down with a CPA who is familiar with your specific locality and state taxes.
You can also try TurboTax for business. That has a dialogue feature that will ask you questions and walk you through the tax process.
If you are that lost on income tax, hire a tax professional to do them for you. The Federal tax code is 2600 pages long.
I just skimmed through your post so I apologize if I miss anything. Go to chatGPT and ask how to do business taxes and if it’s to advanced language ask if to explain it to you like a you’re a 10 year old.
I’ve asked chat many legal questions using the same method
This is actually a good place to start.
Other people have given you excellent advice about finding a bookkeeper, tax preparer, and asking chatgpt, so I will just add my best advice to that since I haven’t seen it mentioned:
If you haven’t already, open a checking account for the business, and keep business and personal transactions separate.