This is going to be a short post today, mainly because I can't think of much to write about. But, since tax season is fast approaching, I thought I'd tell you a little bit about what I do along those lines. Here's a hint - not much.
When you are starting a law firm there are two things that you can be pretty sure of. First, you aren't going to be making a ton of money your first year. Second, especially if it's just you, there are going to be basically two line items, income and expenses. Amortization, depreciation, and capital expenditures probably aren't going to be entering the mix much.
So why make it more complicated than it needs to be? For me,up until this year (2011) I didn't even use quickbooks. I just had a spreadsheet. When money came in I noted it. When I paid a bill or incurred an expense I noted it. Then at the end of the year I added it all up and figured out what my tax liabilities were (if any). And there weren't many.
I haven't done my taxes for 2010 yet, but I must admit I'm a little bit nervous. I made a little bit of money ($45,000 or so - net) so I know I need to be paying some tax on that. But I don't know exactly how much. That's what's making me nervous. I could end up owing some decent money, which is going to be painful to part with.
This year, in hopes of lessening that burden, I'm putting money away every month into a money market account. I'll make a little bit of cash on it and then have it available when it's time to pay Uncle Sam. Better that than to reach the end of the line and realize I don't have enough to foot the bill.
What are your tax strategies? When do you think it's time to hire on a CPA to help you out? For me, that's probably coming up soon. But the thought of it's a little scary.
Have a great weekend.
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