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Wednesday, April 18, 2012

Complicated Taxes

Tax day here in the United States has come and gone and let me say, it is perhaps my least favorite day out of the year.  Every year, I say I am going to get my taxes done early, get everything figured out in January, and be all set before the rush in late March and April.  Well, once again, my procrastination kicked in and I waited till last Wednesday to go see our accountant.  I haven't personally done my own taxes since I started my business seven years ago.  Too much detail is involved, there is too much I don't know, and quite frankly, I don't want to screw anything up and have our wonderful version of Big Brother, the IRS, come hunting me down.  To make my life, and the life of my wife easier, we see an accountant which takes away a good chuck of stress.  The big issue for me is simply getting all the paperwork for my business in order.  I enjoy running my own business, but I hate paperwork, any kind of paperwork.  Receipts get piled in one area, bills in another, quotes and invoices in another.  Luckily I know where I put everything so come March (although I always have the best intentions of starting in January) I can just gather the piles together and start making my master list of revenue and expenses.  Then we rush off to see our accountant and have him put the appropriate numbers in the appropriate boxes and come up with either what we owe or what we will be refunded.  The last few years, there hasn't been a refund, but rather a bill that needed to be paid. 

This year, luckily, was different.  Normally, when your self employed, your supposed to make estimated payments towards your taxes so that when tax time comes, you don't end up owing an enormous sum of money.  We usually make about half the payments we are supposed to and this probably won't change.  For the first time in a while, after all was said and done this year with taxes, we ended up being eligible for a refund from our wonderful government and the hawks over at the IRS.  The only twos reason this happened was because my wife went on maternity leave and ended up making less than she normally does in a year and because we had a son, we get a tax credit for him as a dependant.  It wasn't an exponential amount we would have received back, but it was enough to make a difference on next years taxes.  So instead of actually getting money in our pockets, we decided to push it towards next year and start with a deduction before we even begin.  Our estimated payments this year as a result will be far lower than in previous years and we might actually pay them all.  So all in all, taxes are not that horribly complicated if you have an accountant do them for you, but come 2013, they will become increasingly complicated for business owners.  That is the year when our government and the IRS will be putting an added burden on business owners.  Starting that year, in an effort to fund Obamacare, every single business owner in the United States will have to distribute 1099's to every company they buy more than $600 worth of supplies/materials from. 

For me, this means that if I buy more than $600 dollars worth of supplies from Home Depot, I must issue them a 1099.  The same goes for the local hardware stores I shop at.  Essentially, instead of just tracking my receipts, I must now track them by business to see how much I buy from a certain business.  Now, if I track this well enough, what I could do is find enough local hardware stores and distribute my purchases among all of them, not spending more than $600 at any one store in a year.  That number might seem quite high, but for a contractor, $600 is not that much.  From last year alone, I probably would have had to issue at least four 1099's.  In my mind, it is all crap!  It is merely a case of our government passing on the burden of financing this new health care bill to all the businesses in the United States.  As if they didn't have it hard enough offering medical insurance to their employees.  And people wonder why I don't hire anyone.  It is just too damn expensive and I would rather keep more money in my pocket than in the government's pocket.  But enough about taxes, I have gotten my frustration out for this year and I am sure there will be more frustration next year.  But till then, my receipts will continue to migrate to their respective piles and I will maintain the best of intentions of staying on top of all the paperwork and doing it a little bit at a time.  (Ha!  If you believe that one, I have got a great story about elves and unicorns for you.)

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