Self-employment is on the rise, and more people than ever are owning their own businesses and pursuing freelance work over traditional nine-to-five jobs. Nontraditional workers in America rose 36 percent over the ten year period between 2005 and 2015. While the allure of being your own boss may sound exciting, realistically it’s hard to do everything yourself. Just because you decided to pursue your passion selling homes or managing a restaurant doesn’t mean you automatically know how to do things like file your business taxes or stay on top of bookkeeping. In fact, unless your business is in financial services, you’d probably rather be doing anything else.
That’s why having a financial advisor is so important for the health of your business. It might feel counterintuitive to pay someone to manage your finances, but often having a financial advisor will save you money in the long-run. The key is finding the right person for your business. You’ll need to decide if you want someone to help year-round or simply during tax season. Once you find someone, they will assist you with anything from managing payroll to strategizing smart financial moves for your business. Come tax season you’ll undoubtedly appreciate the assistance. If you choose to work with someone year-round for financial services, having someone who knows the ins and outs of your business will be better equipped to advise on tax strategies that will save you money.
If you’ve ever been on the fence about working with a financial advisor, this year is the time to do it. The 2017 Tax Cuts and Jobs Act was the biggest change to tax laws in decades. Even if you’ve been doing your own taxes for years, you may want to brush up on any new laws or changes to existing laws. There are several updates pertaining to small business owners in particular, including a lower corporate tax rate, new regulations for pass-through businesses, and tax breaks for certain industries.
Most notably, the 20% Qualified Business Income Deduction could lower the percentage of your income that is taxed. This means that if your taxable income is less than $157,500 for individuals or $315,000 for married taxpayers filing jointly, then your deduction will be 20% of your business’s net income. If this all seems like too much to keep up with, a tax advisor or financial advisor like the professionals at Denver Tax Advisor will be able to help you navigate these changes as well as the financial side of owning your own business.