Estimated Quarterly Tax Payments

Like most very small businesses, I have had to pay Estimated Quarterly Taxes for about twenty years now. I was first introduced to this ritual by tax preparers. After we finished filing my taxes for the previous year, they gave me four little slips of paper, one for each quarter. Each slip of paper had a dollar amount written on it, the amount I was supposed to pay in estimated taxes for that quarter, based on my income and tax rate from last year.

But in the wild world of self-employment, last year’s income doesn’t necessarily have much similarity to this year’s income. Plus, the “quarters” vary greatly a lot in actual length, from two to four months. I wanted to pay amounts which were more based on my real taxable income for that quarter. For example, between April 15 and June 15 is a two-month “quarter”; I wanted to pay estimated tax on my actual income for those two months, instead of an amount based on three months of my last year’s income. (more…)

Keeping Books

It turns out that if you run a business, you have to keep track of where the money comes from, and where it goes. In any business larger than a kids’ lemonade stand, this is strictly necessary in order to know what is happening with the business. And in the U.S. and most countries, you have to pay taxes to the government based on those numbers. This is bookkeeping, and if you do it right, it serves as management accounting. (more…)

Online Banking: Just Do It

I’ve used online banking for about ten years now, while I managed finances for a household and two businesses. In that time it has been necessary for me to visit a physical bank only a handful of times, while the other thousands of transactions were done from home, or wherever I was.

Unless you’re living without electricity or Internet, it’s a sensible way to do it. My accounts are all reconciled and balanced several times a week; when Bank Statements become available, they’re just old news to me, since I’ve been paying attention all month long.

And for travel, there’s no comparison. I spent a year and a half working in Mexico for clients in the United States. My clients would receive my emailed invoice, and with a few clicks, pay me. When the funds cleared, I withdrew pesos from an ATM. (more…)