Probably the biggest question on your mind after becoming a jewelry designer is, “how do I pay taxes?”
It's not as difficult as you think to pay income taxes for a jewelry business.
But, if you’re anything like me, you want to make sure you cover all your bases.
One way you can feel in control of your taxes is knowing how and when to pay your self employed income tax to avoid surprises at the end of the year.
Make Quarterly Payments
It’s natural to see money in your account and want to use it. Making these payments, rather than just “setting aside”money, is important because then you’re not tempted to spend more than your business can afford.
You might think you’re saving enough money for your taxes, but actually making the payment is the only way to be sure you’re going to have enough to cover your taxes.
Getting in the habit of paying in your estimated quarterly taxes saves you lots of stress when it’s tax season. Plus, you won’t have to send a huge chunk of money all at once.
Estimate Your Taxes Properly
Did you know your materials aren’t actually included in Cost of Goods Sold until they’re actually sold? It’s true. Most designers who aren’t working with a jewelry tax and accounting professional make the mistake of counting all their inventory under that category.
When, in fact, you need to categorize your inventory as a business asset until it’s actually sold. This can be good, because it means your business might be more profitable than you think. But you’ll most likely end up paying income tax you weren’t expecting if you don't categorize it right the first time.
If you’re not sure how to estimate your taxes, you can use accounting software like Quickbooks or check out the options our partner, Accounting for Jewelers, has to offer!
Pay Taxes Online
Yes, you can make your income tax payments online! It’s actually a really simple process that takes about 2 minutes. Click here to read more about making these payments.
Schedule a day in your calendar, once a quarter, to sit down and pay your taxes. Then, go get a pedicure or massage, something to reward yourself for being a responsible business owner!
You might be surprised how good it feels to know you’re on top of your taxes all year long!
The truth is, it’s always smart to hire an accountant and/or tax professional as soon as you can afford one.
They’re going to give you the most accurate advice and it’s worth the peace of mind knowing you’re covered.
Do you pay in your quarterly taxes? How do you pay income tax for your jewelry business?
*we are not licensed tax professionals and you should follow up with your own accountant if you have any specific questions about paying income taxes.