This post was originally published on December 18, 2017.
If you missed Part 1 of my blog post on Lauren and her business Pixologie Place, you’ll want to read that first here.
Since this is a CPA blog, I had to ask Lauren some general business and accounting questions—of course! Lauren kindly indulged me, and her responses are paraphrased and italicized below.
What was the hardest obstacle to overcome as you started your business? I had to get out of my own way. I tend to have too much of a perfectionist attitude. That can be good and bad. I had to remember that it is okay to start things simple. I wished I would have settled on the name of my business sooner, but to me a name is very important. It sets the stage for everything, and I didn’t want to change my business name later.
What do you like least about owning your business? The aloneness. Self-employment often requires working alone and doing things on your own. I wish I had employees and more people to collaborate with daily. I know this will come, but I’m not there yet.
What do you like best about owning your own business? I love the flexibility of my schedule and the creativity I can bring to projects. I see clients overwhelmed at the beginning of a digitization project, but by the end, the clients realize with excitement what they have—preserved memories. I watch clients go through this mental process, and I am happy to be part of bringing these precious memories back into their lives.
What accounting or tax issue caught you by surprise? I thought I had to file a tax return every quarter, but my accountant told me this didn’t apply to me. I just need to file my income tax return annually.
What is your least favorite thing about accounting or taxes? Everything. I hate it. That’s why I hire someone else to do it.
What accounting software do you use? I use Quickbooks Online (QBO) self-employed version. But I downloaded the PC app, which allows easier logging in. In my opinion, the QBO interface is hard to learn though for someone with no accounting background.
What is (are) your most useful computer software? I like Trello for organizing my to-do list. The software is free, and I like the strong visual of projects. I’m also able to move projects around very easily.
There’s also a very cool cloud-storage app that I offer through my business, which allows people to store their digital photos Forever because the app guarantees it will upgrade the files to the latest technology of the time. It costs a little more than other services, but I think it’s worth it to own the space and files myself, rather than allowing the other apps to use my photos, sell my info to other marketers, or heaven forbid, go out of business.
What is one piece of advice you have for someone just starting a business? If you’re able, start your business part-time while you are working as an employee full-time. This will allow you to make money as you launch your business, which can take a while to become profitable.
Accounting/tax Tip: Lauren mentioned that prior to starting her business she thought she had to file quarterly income tax returns. In my experience, this is a common misconception to many new entrepreneurs. The below filing requirements may or may not be needed by new businesses.
- Sales Tax Reports – These reports and payments depend on your product or service, the state you live in, and the dollar level of sales. These reports may be required on an annual, quarterly, or monthly basis.
- Employee Withholding Forms – If your business has employees, you will need to file forms and pay applicable amounts. The timetable for filing depends on payroll frequency and dollar amounts.
- Estimated Tax Payments – This is not an income tax return; rather, they are quarterly tax payments made during the year to offset your tax liability when your income tax return is filed. Making estimated tax payments is based upon your income level, tax withholding from other sources, etc. Your tax professional can help you determine your estimated tax payment needs.
- Other Filings – Each business is unique, and your product or service may have special filing needs. Please speak with your tax professional.