Module 6 - Profit First - So should I add taxes to my personal spreadsheet? I know of a number of people who make about this much or more in the state of SC and they end up owing the government money during tax season. How do I prevent this from happening as I increase my income?
First, I’ll give you the disclaimer that I am not an accountant or certified financial planner so whenever it comes to tax preparation, you need to speak with an accountant. Here is my opinion: You can add taxes to it. The main way to prevent tax problems is to notice whether you are PAYING taxes within your paycheck or not. For example, if you are running your own business, you MUST be setting aside taxes, but that money is coming from what you are actually getting paid.
There are also some other situations where there is a higher tax liability e.g. getting paid from TWO different jobs that are each collecting tax automatically but takes you into a higher tax bracket.
These are nuances that you would need an accountant to walk you through at that time.
I honestly wouldn’t take a ton of time planning for this when you are not yet IN the job or RUNNING the business. When that money starts coming in, then you can reach out to an accountant and ask these questions.