Record and Deduct Sales Tax Effortlessly With Shoeboxed

Deducting sales tax just got easier 

All Shoeboxed customers now have the power to add a new data field to their digitized receipts: sales tax, value-added tax (VAT), or goods and services tax (GST). 

Once you opt-in, Shoeboxed will begin scanning sales tax/GST/VAT information on future receipt submissions. This information will then be included in your digitized receipts for you to organize as you see fit. 

Taking advantage of this feature means you won’t have to hunt down and mine your receipts for sales tax data: we’ll store that information for you so you can deduct sales tax quickly and easily.  

PS, haven’t filed your taxes yet? Here’s everything you need to know about the new tax deadline.

More money in your pocket 

Deducting your sales tax reduces your tax liability and ultimately puts more money in your pocket. When you opt-in to tracking your sales tax data, we’ll make it easy for you to report on and deduct it. 

Not sure if you can or should deduct sales tax? If you made large purchases last year, live in a state with no income taxes, or otherwise plan to itemize your deductions, this strategy can be particularly beneficial. 

The new tax deadline means you have more time to maximize your deductions. Learn how.

Getting started 

Not on a Shoeboxed plan and want to start recording your sales tax? Try Shoeboxed free for 30 days.

Current Shoeboxed customers can opt-in to recording sales tax from their account settings page. For full details on how this new feature works, visit our Help Center.

Everything You Need to Know About the New Tax Deadline

What the New Tax Deadline Means for Your Refund, Who It Applies To, and More 

April 15th is synonymous with one thing for most Americans: taxes. This day marks the typical deadline to file (and pay) income taxes for the majority of individuals and businesses. But things are a little different this year.

In light of the global outbreak of COVID-19, the IRS recently announced that the deadline for filing 2019 taxes and tax payments has officially been extended to July 15th, 2020. This change marks a 90-day extension to file income taxes. 

Of course, the most important thing to know about the deadline change is that individuals and small business owners now have until July 15th to file and pay their taxes. But who does this extension apply to? What does this mean for refunds? 

A change like this can spark a lot of questions. That’s why we’re answering some of your most pressing questions about the new tax deadline below.  

Who does the new tax deadline apply to? 

The new tax deadline applies to all federal income tax returns (and payments) due on April 15th, 2020. It also applies to all types of federal income tax filers: individuals, trusts and estates, corporations and those who pay self-employment tax. 

The new tax deadline applies to all federal income tax returns (and payments) due on April 15th, 2020.

Are there any taxes that the new deadline does not apply to?

If you or your business have a filing or payment date other than April 15th, 2020 this extension does not apply to you. The extension also does not apply to payroll and excise taxes or estate and gift taxes. For full details, consult the FAQs on the IRS website. 

Do I need to do anything differently to qualify for filing my taxes on the new deadline? 

According to the IRS, “taxpayers do not need to file any additional forms or call the IRS to qualify for this automatic federal tax filing and payment relief.” Because this change impacts the deadline for all federal tax returns due on April 15th, 2020, there’s nothing you need to do to “qualify” for the new deadline. It is automatically applied. 

“Taxpayers do not need to file any additional forms or call the IRS to qualify for this automatic federal tax filing and payment relief.”

You may not need to do anything to qualify for the new deadline, but we recommend you make the most of it by using the time to maximize your deductions. 

What does this mean for my refund?

The IRS has not indicated that taxpayers should expect delays in refunds. In fact, IRS Commissioner Chuck Rettig “urges taxpayers who are owed refunds to file as soon as possible and file electronically.” Accepting tax returns and issuing refunds is considered “mission-critical” for the IRS and those operations are still up and running at this point in time. 

The sooner you file your return the faster you’ll get your refund. Keep in mind that e-Filing and using direct deposit is the quickest route to receiving your refund. 

Of course, the sooner you file your return the faster you’ll get your refund. Keep in mind that e-Filing and using direct deposit is the quickest route to receiving your refund. 

What if I had a tax payment due April 15th? 

If you had a federal income tax payment due on April 15th of this year, breathe easy. You can defer those payments without any penalties or interest to July 15th, 2020 no matter how much you or your business owes. Just like the new deadline, this deferment option is available to all types of taxpayers

What about estimated tax payments? 

Many businesses or self-employed people pay taxes using 4 installments or estimated tax payments. These payment deadlines are typically due April 15th, June 17th, September 16th, and January 15th (of the following year). 

While the April 15th deadline has been pushed to July 15th, the June payment date has not been adjusted yet. So the first estimated tax payment for 2020 will be due June 15th, then July 15th, and so on. 

What if I still need more time to file? 

Just like with the typical tax deadline, taxpayers and businesses still have the option to file for a deadline extension. If you’re an individual taxpayer you’ll need to file using Form 4868. Businesses who need an extension will need to use Form 7004. You will need to file for an extension by July 15th, 2020 to avoid any penalties. 

What about state taxes? 

It’s important to note that the shift in the federal tax deadline does not automatically carry over to state income tax. While many states have filed similar extensions, deadlines vary by state. For information on revisions to your state’s tax deadline, check out this guide from the Tax Foundation. 

“The shift in the federal tax deadline does not automatically carry over to state income tax.”

Conclusion

While the new tax deadline may spur a lot of questions, it’s important to remember that this change is intended to provide relief to taxpayers. Having more time to file and pay your taxes should provide some much-needed relief in a time of economic uncertainty. 

As the situation continues to evolve, the best place for up-to-date information on tax deadlines and questions is the IRS website

If you have questions about how COVID-19 is impacting Shoeboxed services, please visit our Help Center.

[Guest Post] 5 Money Management Tips for Solopreneurs

There’s no doubt that solopreneurship is on the rise. Solopreneurs are, of course, entrepreneurs, but because they’re often the only ones with real skin in the game, their money situation is typically unique. 

While there are lots of resources for managing small business finances, managing your money as a solopreneur has its own set of considerations. It’s particularly important that solopreneurs delineate between their personal finances and their business’ revenue. 

Moreover, solopreneurs don’t have designated team members to who they can delegate the “business side” of their business. This means that managing a business’ finances, on top of all other duties, falls squarely in their laps. 

Managing your money as a solopreneur may be tricky but it’s far from impossible. We’ve put together a list of 5 tips to help you get on top of your money. 

Tip #1: Separate Your Personal Bank Account from Your Business 

Banks, of course, are a key partner when it comes to managing your business’ finances. If you’re not already leveraging an online banking partner, it’s worth looking into. Even if you’re working from home, you can have direct access to your bank account, meaning you always have a line of sight into your business and expenses. 

That being said, we strongly recommend separating your personal bank account from your business’ bank account. Separating these transaction types will be crucial when it comes to tax time. You’ll need to quickly and easily understand what expenses need to be reported, which can become unnecessarily difficult when your personal spending is mixed with your business’ expenses. 

If you’re going to have multiple bank accounts, consider a mobile bank account without fees.  Separate and secure your personal finances from your business’, without paying to access your own money.

Tip #2: Track Your Expenses 

Personal finance experts always tout the importance of budgeting, but this advice applies to solopreneurs too. Tracking your expenses is essential to understanding your profit margins and cash flow. But for a lot of solopreneurs, this task can feel like housekeeping and easily fall to the wayside. 

As Spencer Barclay, CEO and Founder of Savology puts it, “Far too many solopreneurs will set up a spreadsheet to track their expenses, but then once they get involved in the daily grind, they end up never using it. The end result is that they have no idea where their money is going, which can lead to overspending or cause them to miss crucial deductions at tax time.”

But tracking your expenses doesn’t have to be a manual process. Take advantage of budgeting apps (like Mint) to automate tracking your cash flow. Instead of having to constantly update your budget on a spreadsheet or on paper, utilize an app that will give you a bird’s eye view of how money is flowing in and out of your business. 

Of course, using an automated solution for budgeting is much more straightforward when you have a dedicated bank account for your business. But regardless of your set up, it’s essential to understand money coming in and money going out. 

Tip #3: It’s Always the Right Time to Prepare for Tax Season 

As a solopreneur, preparing for tax season will need to become a part of your routine. In particular, making sure you’re ready to report your expenses will be key to filing in time for the tax deadline.

Staying on top of your expenses puts you in a great position to take advantage of itemized tax deductions. Receipts for expenses such as business lunches or office purchases need to be kept and carefully stored so that they may be submitted as proof for these deductions. Digital files are typically easier to store and export, and services like Shoeboxed will help you scan, digitize, and organize your receipts. 

Pssst… check out our guide to organizing your receipts for taxes (and maximizing your deductions). 

On top of making sure you’re fully prepared to report your expenses (with proof), you’ll also want to start saving for the possibility of owing taxes. FinancialBin recommends putting 20-30% of your earnings into a short-term savings account to cover state taxes, local income taxes, and self-employment taxes. 

Tip #4: Save For a Rainy Day

The importance of saving up for a rainy day cannot be overstated. Both in your personal and business life, having money put aside for situations where money could be tight is crucial for staying afloat. Did you know only 40% of Americans have enough money put aside for a $1,000 emergency? 

We recommend setting up two types of funds: an unexpected emergency fund and a sinking fund. With an unexpected emergency fund, it’s generally recommended that you have enough money saved for a situation in which your business is operating at a major loss for 6 months. 

Emergency Funds 

A good way to prepare for this is to calculate your business expenses by month. If your business costs $1,000 a month to run, you should have at least $6,000 put aside to fund the business in a situation where it was earning $0 a month. It may not be fun to think about the possibility of needing to tap into your emergency fund, but it’s best to prepare for the worst.

Sinking Funds 

With a sinking fund, you’re not preparing for an unexpected loss. Instead, you’re putting money aside for any future liabilities on wasting assets—like items that need to be replaced every few years. While these types of liabilities are technically predictable, they’re not always top of mind. 

Unlike an emergency fund, with a sinking fund you’re putting money away that you know you’re going to have to spend within the next few years.

When used in conjunction, an emergency fund and a sinking fund will help prevent your business’ budget from falling apart and can also help you avoid needing to take out loans and go into debt. A sinking fund also prevents you from using your emergency fund on sinking costs, and vice versa.

Tip #5: Diversify Your Revenue Streams

For many people, solopreneurship started as, or still is, a side project used to earn extra money while working full-time. The “side hustle” is an example of diversified cash flow, or having multiple sources of income. If one of these sources of income were to drop out, people with side hustles would still be able to continue making money. 

Just like you can create a diverse portfolio of income for your personal life, you should try to diversify the revenue streams for your company to hedge your bets. This will help your company stay afloat in case one of your revenue streams is no longer earning money or starts operating at a loss.

For example, let’s say you run a career coaching business. Your primary “product” is client sessions. However, if you want to start adding new sources of revenue, you might think about creating content that only paying members can access. Or you can sell DIY workbooks to people who want to work with you but can’t afford weekly sessions. 

Launching new products isn’t the only way to diversify your revenue streams. We love this example: making your website/business more accessible. Making your business accessible is not only the right (and often legally required) thing to do, it opens up new customer segments who may have previously not been able to use your services. 

However you choose to diversify your revenue streams, finding new ways for your business to make money is never a bad idea. 

Conclusion 

Overall, managing your finances as a solopreneur is easier said than done, but that doesn’t mean you’re completely on your own. We hope these tips help you realize that not only is technology your friend in this fight but also that a little forward thinking about what could be around the bend for your business can go a long way.