3 Insider Tax Tips for Septic, Sewer and Portable Restroom Contractors

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3 INSIDER ASSOCIATION INSIDER TAX TIPS for Septic, Sewer and Portable Restroom INDEX Contractors

Approaching the tax season as a septic, sewer or portable restroom contractor can be challenging when you do not have enough information about tax laws and how they impact your business. Knowing what forms to fill and the processes involved in successfully scaling the tax season are pretty straightforward and doable once you get the hang of it.

We will be looking at tips that you can use to avoid the complexities of tax payments, be safe from penalties and reduce any costs that you may owe. Not only will you know how to operate tax-efficiently, but you will also be able to effectively run your business without dreading the tax season. Firstly, you need to understand your business and how taxes apply to you.

1. KNOW HOW YOUR BUSINESS WORKS

Although having a small business is part of being a contractor, there are various forms in which small businesses operate, leading to a difference in how tax laws apply to them. For example, as a contractor, you can manage your business as a limited liability company, partnership or even an S corporation eligible for a particular tax designation. Being a contractor, you have differences in comparison with company employees regarding mode of employment and when it comes to filing taxes. Contractors have to pay self-employment tax on the IRS Schedule SE and report their income and deductions on IRS Schedule C. Additionally, rather than the W-2 form for employees in an organization, you must register your income as an independent contractor using the 1099-NEC form.

2. TAKE ADVANTAGE OF TAX DEDUCTIONS

Being an independent contractor, you have deductions that you qualify for when paying taxes that reduce your tax liability. Such deductions come from direct

You can get deductions on several expenses, including advertising costs for your business, health care insurance and even gas mileage for your vehicle...

and indirect expenses you incur from running your business and rendering your services. You should know that for these deductions to apply to your tax bills, you need to ensure you document them so that you can report them properly on Schedule C (Form 1040) while reporting your personal income. You can get deductions on several expenses, including advertising costs for your business, health care insurance and even gas mileage for your vehicle, as long as it was devoted to running your business. In addition, if you run part of your business from your home, you can also be eligible for the home office deduction depending on how much of that space you use. Keeping track of these deductions and other possible ones, including the cost of professional services from lawyers, will help you avoid trouble with the IRS during the tax season while reducing your bill.

3. STAY ON TOP OF YOUR QUARTERLY PAYMENTS

For traditional workers, their employers are liable to automatically withhold their income taxes and submit them to the government to avoid penalties. However, as a contractor, you are solely responsible for estimating your tax bills and paying in due time to avoid penalties. Also, rather than paying monthly taxes, if you have more than $1,000 of income that year, you must pay your taxes every quarter, that is, four specific times that year. The quarterly payments are due in April, June, September and January. As for knowing the cost that you are to pay during the several quarters, you can estimate it based on the amount of tax you paid the previous year. The IRS also offers form 1040-ES, which enables you to calculate your tax payment. Although you will not know the exact figure regarding the tax you owe until you file your personal tax return at the year's end, you shouldn't pay below your estimated taxes or you may incur additional penalties.

RECORD YOUR EXPENSES AND KEEP TRACK OF YOUR FIGURES

By appropriately preparing for the tax season, you can save your septic, sewer or portable restroom business from having issues with the IRS. Ensure you record your expenses so you can easily see where you are eligible for deductions and keep track of your figures to get correct estimates regarding your tax payments. With these tips, expect your next tax season to be a breeze.

Sources https://smallbusiness.chron.com/independent-contractor-tax-tips-1577.html https://www.suntrust.com/resource-center/personal-finances/article/tax-tips-for-independent-contractors#. YhVOBRjTUVH https://www.nerdwallet.com/article/small-business/independent-contractor-tax-guide https://bench.co/blog/tax-tips/independent-contractor-tax-guide/#quarterly-taxes-for-the-selfemployed