I'd say make sure to keep all your receipts (because taxes), keep track of mileage religiously (because taxes), and also be wary of taxes. Not an actual business person but I had to run my own "small business" selling stuff door to door and being able to write off a bunch of stuff as legitimate expenses required as part of running what I was doing was a life saver, but I wouldn't have been able to do that if I hadn't kept my receipts organized and tracked. And at least in Canada, we get $0.52 per kilometre required to drive for work purposes (not including the daily commute to work for regular workers though). This is just the small stuff though - I'm sure actual small business owners will have a lot more input.
Oh I'm absolutely terrified of getting taxes wrong. As a result I'm looking to maybe meet with an accountant to ask about taxes because I have this image in my head of government officials coming to arrest me due to my taxing ignorance. Not Fun!!
As for tracking milage, that is something I hadn't thought of at all, so thank you for the advice. I'm definitely going to go about that from now on. How did you do it? Did you keep a log book and enter the milage after every fuel tank top up? That's the only way I have seen someone track their milage.
For my "small business" (remember, not really) I wrote down what was on the odometer at the beginning of day and then at the end of the day when I was done driving around door-to-door. If you're doing single trips from home (home - client - return home) then you can likely just use Google maps. If you're travelling around to multiple jobs before you get home, I'd say keep track of your odometer. Don't just track it when you fuel up because as /u/YourTaxGuy says, that can get messy with mixing in personal miles versus business miles.
As a tax professional, I can tell you that taxes are not something to be afraid of. If you live in the US, the IRS and most states are verrrrrrrry slooooooooow in getting around to auditing taxpayers, and when they do, very few are arrested or jailed.
As far as tracking mileage, a log book is the best idea. Writing down mileage after each fill up may or may not work, with the biggest issue being you mixing together business and personal miles. If you have a car that's 100% dedicated to your business, then yes, this would work. If not, you can keep a log of every place you drive to for a job, and find out the mileage from your home or place of business to these locations with Google Maps or something similar. You can also write down what you're paid for each job in this log, which will take care of your receipts and mileage at the same time.
I'm the tribe leader over at /t/tax here on Snapzu, and I love answering tax questions like these, so if you want to stop by and ask more there, feel free.
Wow seriously thanks for the response that was really useful even though I live in South Africa so I'm sure there are differences in the systems that I need to find out. I'll definitely pop into your tribe and take a look though.
One thing I would like to ask as a follow up question (I'll bare in mind any answer you give is related to the US and not here), if you don't mind, is about the mileage records. My car is both for personal and work purposes. So I want to ask, is a written logbook of the mileage (i.e. odometer reading before work and after) sufficient evidence of my usage of my car for work purposes? I would truly intend to be as honest as possible but surely they would expect (as the standard) that everyone is trying to cheat the system, and so expect some means to prove your claims in the logbook? This is why I thought logging with refuels were done because a lot of fuel attendants ask the mileage and so I assumed it goes on the receipt which then I thought could be used to validate your logbook. Or am I over thinking this?
Edit It should be noted that I used to suffer from sever irrational anxiety attacks and due to treatment I am doing a LOT better. Having to one day manage my own taxes was one of the triggers to such attacks. So although my fears may seem irrational ("may go to prison"), before I would never have even considered starting my own business, solely because I would be 100% responsible for my tax. So hopefully I may even become comfortablewith the idea one day haha :P
South Africa, interesting. I've had some experience with different international tax systems, but I have to admit that I've never dealt with South African taxes before. So I'll give you a perspective for how things are done in the US, but it's definitely a good idea to find a South African accountant. They should be familiar with the tax code there, and ease your worries.
From my experience with small business clients, keeping a logbook of odometer readings will put you ahead of most other businesses as far as record keeping goes. Here in the US, there are no attendants when you refuel your car, so the only time when odometer readings are done by others is when you get your oil changed or some larger repair. Because of that, the IRS has suggested vehicles that are used for business to get an oil change around the beginning of the year and again at the end of the year, and keep the odometer readings. However, if the car isn't used for business 100%, this wouldn't solve the problem of separating business from personal miles. But a logbook should take care of it.
I'd say make sure to keep all your receipts (because taxes), keep track of mileage religiously (because taxes), and also be wary of taxes. Not an actual business person but I had to run my own "small business" selling stuff door to door and being able to write off a bunch of stuff as legitimate expenses required as part of running what I was doing was a life saver, but I wouldn't have been able to do that if I hadn't kept my receipts organized and tracked. And at least in Canada, we get $0.52 per kilometre required to drive for work purposes (not including the daily commute to work for regular workers though). This is just the small stuff though - I'm sure actual small business owners will have a lot more input.
Oh I'm absolutely terrified of getting taxes wrong. As a result I'm looking to maybe meet with an accountant to ask about taxes because I have this image in my head of government officials coming to arrest me due to my taxing ignorance. Not Fun!!
As for tracking milage, that is something I hadn't thought of at all, so thank you for the advice. I'm definitely going to go about that from now on. How did you do it? Did you keep a log book and enter the milage after every fuel tank top up? That's the only way I have seen someone track their milage.
For my "small business" (remember, not really) I wrote down what was on the odometer at the beginning of day and then at the end of the day when I was done driving around door-to-door. If you're doing single trips from home (home - client - return home) then you can likely just use Google maps. If you're travelling around to multiple jobs before you get home, I'd say keep track of your odometer. Don't just track it when you fuel up because as /u/YourTaxGuy says, that can get messy with mixing in personal miles versus business miles.
Awesome, I really appreciate you guys taking the time to give me some insight :)
As a tax professional, I can tell you that taxes are not something to be afraid of. If you live in the US, the IRS and most states are verrrrrrrry slooooooooow in getting around to auditing taxpayers, and when they do, very few are arrested or jailed.
As far as tracking mileage, a log book is the best idea. Writing down mileage after each fill up may or may not work, with the biggest issue being you mixing together business and personal miles. If you have a car that's 100% dedicated to your business, then yes, this would work. If not, you can keep a log of every place you drive to for a job, and find out the mileage from your home or place of business to these locations with Google Maps or something similar. You can also write down what you're paid for each job in this log, which will take care of your receipts and mileage at the same time.
I'm the tribe leader over at /t/tax here on Snapzu, and I love answering tax questions like these, so if you want to stop by and ask more there, feel free.
Wow seriously thanks for the response that was really useful even though I live in South Africa so I'm sure there are differences in the systems that I need to find out. I'll definitely pop into your tribe and take a look though.
One thing I would like to ask as a follow up question (I'll bare in mind any answer you give is related to the US and not here), if you don't mind, is about the mileage records. My car is both for personal and work purposes. So I want to ask, is a written logbook of the mileage (i.e. odometer reading before work and after) sufficient evidence of my usage of my car for work purposes? I would truly intend to be as honest as possible but surely they would expect (as the standard) that everyone is trying to cheat the system, and so expect some means to prove your claims in the logbook? This is why I thought logging with refuels were done because a lot of fuel attendants ask the mileage and so I assumed it goes on the receipt which then I thought could be used to validate your logbook. Or am I over thinking this?
Edit It should be noted that I used to suffer from sever irrational anxiety attacks and due to treatment I am doing a LOT better. Having to one day manage my own taxes was one of the triggers to such attacks. So although my fears may seem irrational ("may go to prison"), before I would never have even considered starting my own business, solely because I would be 100% responsible for my tax. So hopefully I may even become comfortablewith the idea one day haha :P
South Africa, interesting. I've had some experience with different international tax systems, but I have to admit that I've never dealt with South African taxes before. So I'll give you a perspective for how things are done in the US, but it's definitely a good idea to find a South African accountant. They should be familiar with the tax code there, and ease your worries.
From my experience with small business clients, keeping a logbook of odometer readings will put you ahead of most other businesses as far as record keeping goes. Here in the US, there are no attendants when you refuel your car, so the only time when odometer readings are done by others is when you get your oil changed or some larger repair. Because of that, the IRS has suggested vehicles that are used for business to get an oil change around the beginning of the year and again at the end of the year, and keep the odometer readings. However, if the car isn't used for business 100%, this wouldn't solve the problem of separating business from personal miles. But a logbook should take care of it.
Awesome, thanks again for taking the time to respond to me :)