Are you a trades professional who feels confident about landing jobs, but less sure about handling taxes? If so, you’re not alone.
If you are self-employed in one of the skilled trades, meeting your IRS and state tax obligations is not always straightforward. If this is mishandled, it exacerbates the number one killer of trade businesses, CASH FLOW. Knowing what is coming your way is crucial to managing your cash flow and your business overall.
Tax as Your Largest Expense
For many trades, generating revenue and profits is not the major hurdle. Managing that profit is. Many trade professionals spend all their time landing jobs and not accounting for their largest expense, TAXES. Not accounting for your tax obligations can sink a successful business.
An Ounce of Prevention
Trade professionals face unique challenges—from irregular income, ongoing payroll and maintenance costs, as well as the need for new investment in equipment and facilities. Knowing the right-sized decision for your business, given your known and unknown obligations, is your ounce of prevention. The alternative is overextension, or lost opportunity.
Planning is Key
We specialize in helping hardworking trade professionals fold the tax effects of their decisions into the overall decision. This helps reduce ugly surprises. When tax season arrives, our goal is that the outcome is already known.
Why Trade Professionals Need a Tax Professional in their corner
Many trade professionals have households with multiple income sources that include income from their trade, W-2s, or even side work. You may employ multiple vehicles, use a home office or shop, travel for jobs, buy your own tools, or pay subcontractors. These situations make your tax return more complex than average. This also requires contemporaneous documentation that is difficult, if not impossible, after the fact.
Without a solid tax strategy, you could:
- Fail to meet your tax obligations in a timely manner
- Incur significant penalties as a result of failed compliance
- Trigger audits from incorrect reporting
- Lack the ability to defend your business and yourself in an examination
That’s where working with a CPA who understands your industry makes a difference.
Avoid These Common Tax Mistakes
Not separating business and personal expenses
Open a dedicated business checking account to simplify recordkeeping and protect yourself during tax time.
Failing to track income and expenses
Use accounting software or hire a bookkeeping service. The shoebox method just results in bad outcomes. Banking transactions and documentation must be tied together to be sustainable in an audit.
Failing to document key expenses
Expenses such as automobile, home office, online expenses, travel, and meals all need special attention as the year goes on. Doing so at the end of the year or worse, when examined, usually results in lost deductions.
Missing quarterly tax payments
If you’re self-employed, you probably need to pay estimated taxes every quarter unless you plan otherwise. If you are profitable and do not plan your method of meeting your tax obligations, you will incur IRS and state penalties.
Misclassifying workers
Hiring help? Make sure you understand the difference between an employee and a subcontractor. You need to understand the risks and methods to minimize or mitigate the risks. Penalties in this area are draconian.
James D Miller CPA: Tax Help Built for the Trades
We understand your business because we specialize in serving people just like you. Our services include:
- Expert tax return preparation for trade professionals
- Customized tax planning strategies to measure and minimize liability
- Bookkeeping that tracks job costs and deductibles
- Help with annual filings such as 1099s
- Advice on employee classification and compliance
- IRS and state tax resolution if things go wrong
You focus on the job—we’ll handle the books, deductions, and filings.
Final Thoughts
Filing a tax return for a trade professional isn’t one-size-fits-all. The right CPA can help you pay less in taxes, stay compliant, and plan for growth.
Need a CPA in your corner? Contact James D Miller CPA today and get the expert support you deserve—so you can get back to building your business.
Schedule a free consultation by contacting us.