You don’t have to hire an accountant, but if you’re asking for our opinion, that’s it. A business accountant will always be worth the expense, and it’s not unreasonable to think a good one could save you money in the long run.
Hire a Business Accountant
We advise this for a few reasons.
The first reason is a good business accountant understands the Tax Law. They will ask the relevant questions to make certain you’re claiming all the deductions available as a business owner and verify all your tax forms are filed correctly. There shouldn’t be any mistakes.
The second reason is that as a 1099 freight agent, LDI does not withhold any taxes. You need to pay taxes on the income you earn as a freight agent. A local tax accountant will understand both your state and federal taxes, so they will advise you best. Taxes can look very different between the States, so an accountant will make certain you’re not overpaying or underpaying.
The third reason is that an accountant will provide you with additional value beyond tax season. You can ask an accountant about different situations throughout the year, such as leasing office space, buying a house, or how your taxes will change when you start hiring employees. Many life events can affect your taxes, and an accountant can provide you with information to enable you to make the best-informed choices.
Fourth reason for an accountant: it frees up your time. It may take an agent hours to complete their taxes and it is still possible to make a mistake. If your time is valuable, outsource this task. Outsourcing back-office work is why you partnered with LDI in the first place, so consider this a similar situation and a good use of your time and money.
Convinced? Great! To find an accountant in your area, scroll to the bottom of this article.
Do Your Taxes Yourself (or by a Trusted Confidant)
If you or someone you know is comfortable doing your taxes, that is fine too. There are plenty of web-based tax preparation software programs not affiliated with LDI (like TurboTax or TaxAct) that can help with your taxes. Depending on how you’re doing business (sole proprietor or LLC), check to be certain you’re filing the correct way and using the correct forms.
f you file your own taxes, be certain you claim all deductions available to you as a small business owner.
If you need personal assistance, check to see if help is available to the public in your community. It’s not uncommon for libraries, public colleges, or other public good organizations to provide free limited tax advice. You will be expected to file yourself, but generally there is help available.
If someone else is doing your taxes for you, the IRS recommends you self-check to be certain you truly trust this individual. You’ll hand over your most sensitive information: your social security number, income (1099) statements, and all other tax relevant documents from your mortgage interest to student loans. All the documents most associated with identify theft will be in this individual’s hands. If you have any reservations that maybe this person won’t keep meticulous track of your documents, or may gossip about your situation, don’t let them do your taxes.
What If I Owe Taxes and Didn’t Save Enough Money to Cover Them?
First, take a deep breath. You aren’t the first person this has happened to and you most certainly won’t be the last. Sometimes even well-meaning individuals who thought they properly saved for taxes miscalculated, or a life event happened, and they owed more than they expected.
If this happens, find counsel from someone qualified to talk to you about your options to fix this. They can also give you more information about the penalty associated with an outstanding tax bill. The IRS provides information on their website listed under the “Can’t Pay Now?” section as well.
That qualified individual helping you with this sticky situation can then advise you on how to prevent getting into this same conundrum next year.
The IRS also has more information on estimated taxes for self-employed individuals and small businesses on their website.