I Filed a Tax Extension in April. Now What?

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If your finances were out of control in April, you may very well have filed a tax extension. While a tax extension doesn’t extend the time you have to pay what you owe Uncle Sam (darn!), it does give you until October 15^th to get your paperwork together and file your income taxes. Of course… October 15^th is now rapidly sneaking up!

So what the heck do you do now that the time is almost up? Well, first of all, don’t panic. There’s still time even if you haven’t given taxes a single thought since April. But make no mistake – it’s time to get moving!

Filing, Not Paying…Maybe

Remember when you filed for your tax extension back in April you still had to pay? That was because the tax extension only worked for the actual paperwork and not for the payment. However, also remember that you probably didn’t pay the actual amount you owe.

Why? Because you had to make an estimate on your payment and send that in. Now you’re going to have to figure out the real amount you owe(d). This amount may be much different than what you sent before since you may not have taken every expense or bit of income into account.

Once you figure out the real amount you owe to the IRS just send it in with your filed paperwork. If you overpaid back in April, you’ll get a refund.

Still Time to Get Organized

If you’ve barely looked at your taxes since April (or plain forgot about them), it’s definitely time to bite the bullet. Hopefully you’ve at least organized your receipts and other paperwork so you can pull it out and get started. If not, might as well start there!

Make sure you have everything you need before you start. There’s nothing more infuriating than calculating all your deductions and then discovering another box of receipts. You only want to do this once so you can get it done with!

Pro Tip: If you still need help, use your free account with Outright. Calculations are much easier when we do it for you!

After you figure out exactly what you owe, go ahead and file. The IRS suggests using efile, their online payment system. If you’re filing via snail mail, make sure it’s postmarked by midnight on October 15^th! If not, you may incur penalties and fees.

If you need more tax help, make sure to come on over to our Customer Care Center and ask away!

This post is brought to you by Outright.com, the easiest way to manage your small business finances online.

Outright.com, a Spring Handmade Cavalcade Sponsor

Today I am pleased to reintroduce a familiar resource to entrepreneurs, the free online financial management website Outright.com. Jennifer Dunn of Outright is a regular contributor here on the Etsy {New York} blog, and you can find a myriad of her helpful tax and accounting advice in her previous posts.


Outright is proud to be a sponsor of the Spring Handmade Cavalcade which is happening this Saturday, May 5th, from 11am - 5pm at Littlefield in the Gowanus neighborhood of Brooklyn. Not only does Outright provide a great free online accounting tool, it helps small business owners in particular organize their finances in an easy, smart way by pulling accounts into one, easy-to-navigate place. Furthermore, Outright automatically categorizes transactions in a way the IRS expects, so your records are always up-to-date and you can view estimates of what you owe at any time. Hop on over to Outright's excellent website and give it a trial spin, and see how much easier it makes your life!


Many artisans from the Etsy {New York} Street Team use Outright and have raved about it. Jane from Hazel Village writes, "I've used Outright.com for a year and a half, and it has saved my butt at tax time twice now. My PayPal and my business bank account (therefore Etsy, Square, and Big Cartel) all link to it. I'm so bad at keeping up with bookkeeping, so it's been totally lifesaving to have it automated. The interface is easy to use too. I would recommend Outright to anyone who had to keep small business records."


Kelley from Kelley Gudahl Photography says, "Outright makes it very easy to see where your finances stand for the month and overall for the year. There are so many things that you have to worry about in owning a small business and now my bookkeeping isn't one of them."


Thank you Outright for your wonderful accounting system and for your support of the Spring Handmade Cavalcade!

Karina
Windows of Agate

Need more time for taxes? File a tax extension!

Oh no! Taxes are due and there’s no time to complete them! My deductions aren’t ready and I don’t even all the receipts I need in anything resembling an order! What am I supposed to do?

If you found yourself saying these very things with the tax deadline approaching, it may be time to file for a tax extension. Yes, they exist, and work surprisingly well. All you have to do is file one simple form and voila, you have a lot of extra time to get everything ready!

But is it really that easy? Does filing a tax extension come with unforeseen consequences? Let’s take a look.

Filing

Presumably after reading the opening you probably just want to know how to file for an extension, so we’ll cut to the chase. The form you want is Form 4868. It’s an astonishingly simple form for one with such power, and only takes a few minutes to fill out. You can also file your tax extensions using online services like Turbotax Easy Extension. Though those services do charge you a small fee, they can save you the effort of finding and mailing the 4868 form. No matter how you file, you can buy yourself a six-month extension on the time you need to pay your taxes.

But there’s one major caveat you must remember when filing a tax extension. As you fill the form out, you’ll notice the information you provide is pretty basic: name, address, etc. However, the second part of the form asks you how much you owe.

Wait, what? How are you supposed to know how much you owe if you haven’t filled out your forms yet? The whole point of this was that I didn’t have time to file!

The problem is the tax extension covers your actual tax filing and nothing else. So when you send Form 4868 into the IRS, you must also submit a payment toward it by the tax deadline – this year that’s April 17^th. However, you don’t have to have an exact amount. You just have to figure out how much you estimate you owe. (Outright.com can help… sign up for a free account and estimate how much you owe in taxes today!) When you do file, you will either pay the remainder of the amount you owe or receive a refund.

What To Do After

Now that you’ve sent in the paperwork to push back your due date (and a check how much money you owe, right?), what do you do now?

You’ve been granted a six month pass on your taxes, so use it wisely. Get as organized as humanly possible. Find all those missing receipts and count up every last penny you think you can deduct on your taxes.

Don’t waste this time as it’ll be over before you know it. You want that estimated payment to be either on the money or too much so you get some in return and avoid penalties. Plus, the IRS doesn’t exactly hand out free passes all the time, so when they throw you a bone, milk it for all its worth!

Getting organized during this time can also help you in the long run. After all, you’ve probably always wanted to get your business into tip-top shape, so now’s the opportunity! Get all that paperwork into order and keep it there. Then come next year there won’t be a need to file for an extension.

This post is brought to you by Outright.com, the easiest way to manage your business finances online. Sign up today for a free Outright account!

How to Make Your Accountant Love You at Tax Time

If you think you have it bad during tax time, consider your poor accountant. Not only do they have to deal with all your craziness and random boxes of receipts you rush in at 10 PM on April 14th, they also have to put up with the same madness from their other clients!

This time of year is just as stressful for them as anyone else. After all, once they go home, they still have to do their taxes. The big difference is they know what it takes to keep it all together and you don’t – otherwise, you wouldn’t be hiring them, right?

But instead of pawning 100% of the responsibility off on them, there are a few things you can do to make their lives easier. As a result, you’ll more than likely get a better result on your tax return as well.

Get Organized

Obviously the first thing to go will have to be those boxes of random receipts. They’re not helping anyone and may be hurting your chances of getting a healthy tax refund. It’s time to get organized!

But your receipts aren’t the only thing you need to start categorizing. Everything else your accountant has to decipher and include in your taxes should be organized – expense sheets, profits and loss, the works.

This way, when a question arises, your account doesn’t have to spend hours looking for the answer – or, worse for you, calling you up wondering what the deal is. Once everything is in its rightful place, they can use all the detailed, organized info you provided and move on.

Make sure to use labels, too. It may seem like you’re helping using your own unique filing system, but if no one else can interpret it you’re right back to square one!

Don’t Be Ridiculous

“Yes, I would say I use all three of my computers solely for work.”

“Of course you should count my TV as a deduction, I put on smooth jazz when clients come over don’t I?”

“I wouldn’t say I’m quite in that tax bracket – some of this money wasn’t ‘serious’ money, more like hobby money.”

If you’ve ever heard words like these come out of your mouth, you probably also remember the look your accountant gave you shortly after. No doubt you want to try to get as much refund from the IRS as you can or lower your payment as much as possible. However, there comes a time when you’re just being ridiculous!

Making up silly stuff to try and expense or lying about how much money you made doesn’t help anybody…especially you when you get in trouble! People try to expense crazy things all the time. There was one case where a woman tried to say her gardening supplies should be a business expense as she worked from home and it was part of her company’s appearance!

So try not to stretch your accountant’s trust too thin. He or she is not there to work magic, they’re there to get you through April as unscathed as possible. Being honest with your business and the money within is a great step towards that!

Spreadsheet love + Outright.com

loopzart on Etsy.com

I love spreadsheets. Seriously, I do - it’s true. I guess it’s just the way my brain is wired. So, when I started my small business in earnest a few years ago, I was like “Financial accounting & bookkeeping? Oh, I got this one – I’ll make spreadsheets!”

…So why then, after nearly two years of manually keeping the books on various spreadsheets, was I finding it so difficult?

That is because entering transactions manually is really a drag – and as much as I love spreadsheets, accounting isn’t my forte. Especially when I know there is a better, and faster, way and who isn’t always super crunched for time? I recently started looking into software like Quickbooks and scouring blogs and websites dedicated to helping small businesses manage financial bookkeeping and taxes (don’t even get me started on taxes!). I was stressing myself out because I couldn’t seem to find a good, easy and affordable solution. I knew there must be a way to rope all of the devices, accounts and ways we collect money from our customers into one single application…

Through the grapevine, after the very successful launch of the recent Hello Etsy symposium, I heard about Outright.com. At first I was skeptical – was this just another one of those dashboard type programs (or like many apps that I come across these days that are pointless) - something claiming to be more useful than it truly is? …nonetheless I was intrigued, so I dug in some more.

Outright.com is a platform that loops in all of the different sources of income that a small business may use (like Paypal, bank accounts, Etsy, Ebay, etc.) and it keeps track of taxes all in one easy to use account. The creators of Outright.com came from Intuit (that’s Quickbooks, by the way), so we know they know their stuff. Launched in 2008, Outright has over 100,000 business users. I am now one of them.

For the past 2 months I have been a happy Outright.com user. I’ve linked my Paypal, Etsy, business checking and savings accounts and am ‘teaching’ the program to recognize my reoccurring entries. It’s simple, easy to use and I can keep a close eye on my spending with real clarity. Since I’m a visual person, the charts are one of my favorite features. You don’t have to be a savvy accountant to feel confident and knowledgeable about your finances.

If you are an Etsy seller, Outright is offering free accounts! Just hop on over to their Etsy seller Outright signup page for your free account and to learn more!

In conjunction to offering free accounts, Outright has signed up to be a lead sponsor for The {NewNew} Holiday Handmade Cavalcade in December!

Thanks!

Corey // Sans Map

Handmade Bags & Accessories

Introducing Our New Financial Guest Blogger

The {NewNew} is please to introduce a new guest blogger,  Laura Messerschmitt. 

Laura is the Vice President of Marketing at Outright, a free online accounting software for small businesses.   She loves helping the self-employed and small businesses to be more successful and grow their businesses.    Some of the topics Laura will be writing on are: 

- Women and Money: Why you should track your money
- Getting Your Etsy House in Order for the Holiday Sales Rush
- End of Year Financial Checklist for Crafters

We are all looking forward to Laura's posts which will be on the last Tuesday of each month.  If you haven't subscribed to our blog yet you'll want to.  Subscribing is easy just scroll on over to that little subscribe box to the right, fill in your e-mail and hit submit.

Holly / EllisDesign