Creative Minds, Smart Finances: Tax Tips for Entrepreneurs and Side-Hustlers

Let's talk about something that might not be as glamorous as brainstorming your next project but is just as important: taxes. Whether you're pursuing creative entrepreneurship as your main gig or as a side hustle alongside your 9-to-5, being ready for tax season is part and parcel of all careers. So, let’s roll up our sleeves and review these tax tips for preparing year-round, ensuring our financial pursuits stay on track as creative entrepreneurs.

*Please note, that we are not tax experts.

The Challenge: Underpaying Estimated Taxes

Yes, there’s the normal tax return that all taxpayers have to make in spring, but if you’re pursuing a side hustle or leading a small business, you could also be penalized for not paying quarterly estimated taxes. Normally, you have to pay estimated taxes if you’re expected to owe over $1000 for that year.

The Solution: Take a proactive approach by saving a portion of each project’s earnings into a special savings account earmarked for taxes. Keep tabs on your income and expenses, and don’t forget to send in those quarterly estimated tax payments.

The Challenge: Lack of Record-Keeping

Let’s face it – keeping track of receipts and invoices might not be the most thrilling part of your creative journey. However, having a dedicated folder for all your invoices and receipts is important.

The Solution: Set down on a good accounting software or a plain old spreadsheet. Some of our favorites are Wave, Keeper Tax, and even Google Sheets templates. Keep copies of all 1099 and W-2 forms, so that you can keep track of which returns you’ll need from which clients. Categorize your expenses, snap photos of receipts, and watch as tax preparation (with an accountant!) becomes a breeze.

The Challenge: Missing Deductions and Credits

Ah, the hidden gems of the tax world – deductions and credits. Missing out on these can feel like leaving money on the table. Investing in the expertise of a tax professional ensures that your tax return is 1) of the best benefit to you and 2) legitimate, with no income slipping through the cracks.

The Solution: Stay informed and enlist the help of an accountant who knows their way around small business taxes. Together, you’ll uncover legitimate deductions and credits you never knew existed, putting more cash back in your pocket. This is why keeping track of all business-related expenses, from gas to office materials to Adobe/designing software, is important.

The Challenge: Procrastination and Poor Planning

Ah, the allure of leaving things to the last minute. We’ve all been there, but when it comes to taxes, procrastination can lead to headaches – and potentially, penalties.

The Solution: Perhaps the most important tip: you can't view taxes as a one-and-done. Set aside regular time for financial housekeeping (maybe monthly), mark those quarterly deadlines on your calendar, and tackle tax preparation. Thanks to your proactive approach, you’re able to focus on what you do best – bringing your creative visions to life.

These tax tips for creatives & entrepreneurs have a common thread: preparing year-round.

In wrapping up, remember that tax season doesn't need to be daunting for creative entrepreneurs. By incorporating a bit of organization, pre-planning, and reaching out to a tax expert, you can tackle tax obligations with ease and confidence. So, here's to maintaining your creative spark while ensuring you're on top of your tax game! If you're ready to take control of your finances and streamline your tax process even further, consider trying out one of the accounting or spreadsheet software options mentioned earlier. With the right tools and mindset, you'll be well-equipped to navigate tax season like a pro.