I alluded last post how April is shaping up to be a not so fun month for me. It starts out that April happens to be the Triple Crown of Taxes for many people and Im one of them. Having 3 deadlines in one month on top of a slowing period of business is making this to be one of the suckiest months evar! Sometimes I would like to go back to working for the man and living in an apt…
Taxing the Land You Live On
Yes this is the month that first up is the second installment of property taxes. Property taxes are broken up to be due in December and April every year. My fist beef of course is why is this less than 6 months apart? Would make sense and be easy for people to put away money each month to pay it. I guess once you got going putting an amount aside each month it would eventually balance out, its just the principle! I should be grateful I guess that Prop 13 was passed many years ago that capped the tax amount. It is assessed when you make the purchase based on the property value, there after I believe any increases are capped so it barely rises. Where it used to be reassessed every year and with the way values were skyrocketing that would have been bad.
Uncle Sam’s Deadline
Next up of course is April 15th, the dreaded income tax filing deadline. For many like me we end up owing each year, which is better than getting a refund. I actually think that we should do away with the withholding system and that everyone has to write a check (ok these days is click a few buttons) for their taxes each year. This way I think their would be more outrage about taxes and more concern on how the governments spend YOUR money. As it is now its taken out of your pay before you even see it. Out of sight, out of mind… you dont really think about it. Im sure this was done by design.
Also everyone should be self-employed for a year or two and then they may wake up to the payroll taxes. Being self employed you still have to pay social security and medicare taxes. This is about 6.5% that is again withheld by your employer, but when you are the employer you also have to pay another 6.5%. You see your employer pays that on your behalf on top of the 6.5% that is withheld from your wages so being self employed you are paying 13% of your net income on top of your income taxes! Yea for entrepreneur incentives!
States Want Their Share as Well
Finally we have the quarterly sales tax due to the state. California is one of the fun states that businesses have to collect sales tax on the products and services we provide. As a photographer that is about everything, yes I collect taxes on the obvious prints and physical products that I sell to my clients. In California at least the service of taking the photos is also taxable so I have to charge sales tax on all my session fees. This is something a lot of my fellow photographers dont realize when they are starting out. Used to be if the end product was to be non physical, like digital files emailed to a commercial client then none of it was taxed, but if I were to hand over the files on a disc to the client then boom, sales tax on everything! I read some where that they got rid of that loop hole though.
Wake Up Call
To cap it all off I have become lazy in the past couple months. I havent stayed on top of the money shuffle, paying myself, setting aside money for property taxes and sales taxes. The only thing I was on top of was income taxes, as that was done automatically $125 to an ING account weekly. Problem with that is that it wasnt enough. Seems I mad a bit more actual income in 2011 as opposed to 2010 which I based my numbers on. I already told you about my spending sprees in the last couple months as well.
So I need to sit down and do some more money shuffling and figure things out. Been looking at refinancing the house for a lower rate and payments, this may be the time to do it and take a little out to take care of some of the taxes as well. Also have to take another look at the budget and work harder at sticking to it, not just watching it and saying darn went red on that one again.
How about you? Do you find yourself off track often? Does it take a big wake p call like this to get you back on track?