To most people’s surprise, I have always completed my own taxes. That is if you count using software like TurboTax as “doing your own taxes.” If you don’t count that, then at least I buy the software myself. Okay, that’s a lie. My dad buys it and then sends me his copy. Did I mention I’m 36?
Regardless, in order to use the software and not a CPA, I’ve always just kept everything as simple as possible. I didn’t claim any dependents (though with as many medical bills our dog has, he should be one). When I got the forms, I’d plug Box A from the paperwork into Box A in the software. Turbo Tax was happy. I was happy. The IRS was happy. Everyone was a winner.
But then I had to mess with perfection and fuck it all up by going and making myself a business. I tried to prepare for this. I took a class at the local adult education center called “Taxes For The Small Business Owner.” The teacher answered some general questions and I discovered that I was a sole proprietor rather than an LLC.
Then we reviewed what more of the boxes meant on form something-something for businesses. We got about a third of the way through and suddenly class time was up. The last lesson she gave before we left was that there was no way we could do it ourselves and we should just use a CPA (she gave a free 45 minute consultation).
I wanted to leave her a bad review. Instead I gave her a good one just in case I would actually need her help. I didn’t want her to be mad at me.
A few months later, I received a threatening letter from the Department of Revenue talking about “sales tax.” The letter said I had five days to respond. If I didn’t respond, they’d revoke my business license. I got the letter on day six.
It took me a few moments too many to register what “sales tax” even was. The teacher didn’t mention anything about it. She might have just been using that class to funnel new clients to her business.
I scrambled to go on the Department’s website to try and figure this out, but none of it made any sense. What was I selling that I needed to collect sales tax? Our guest room on AirBnB? I went to their website and they said they collected and remitted sales tax on my behalf. Mister BnB? Bingo! They didn’t do that - darn homos.
Oh, and I guess I also sell my tip-and-strip pens (which if you haven’t seen, check them out. I’m pretty sure it’s the only pen currently that gets fully naked.). But I still didn’t understand. Was I supposed to be collecting sales tax on these? I thought that was the beauty of online purchases: no sales tax.
I woke up early the next day to get down to the Department of Revenue office and tell those dickhead bureaucrats that they needed to be patient with me. Didn't they know I was new to all of this? Didn't they know I have a hard time making it to my P.O. Box?Didn't they know my desk was a mess? Didn't they know I can't do math?
When my number got called, I pulled up to the desk of a bureaucrat that was neither dick nor head. In fact, she was a lovely woman. As I exploded my panic all over her, she immediately put me at ease.
“Don’t worry,” she said. “For your online sales, anything sold outside of the state of Colorado does not require you to collect sales tax. But inside the state, you do need to collect the taxes. So if you sold anything in Colorado during this quarter, you will be remitting those taxes. But it varies by county. Here, let’s do an example form on my computer.”
If life was Super Mario Bros, she would have been my Princess. Actually, I think in this analogy, I would have been the Princess and she would have been my Mario. She completely saved me.
When I got home, I immediately logged on to file my Sales Tax. Then, when I got to the form, I had forgotten 73% of what she said. So really, I’m just the Yoshi - running around mindlessly smiling while everyone does the really tough work.
So, I did the best I could, I plugged in the dollar amount for my pen sales in December (we hadn’t started hosting the BnBs yet). I had sold four pens in two different counties in Colorado. How do I differentiate between the counties on this form? I couldn’t figure it out so I just lumped them into one and the sales tax calculated to owing only one dollar. This couldn’t be right, but I submitted it anyway.
Fortunately, the Department hosted free classes and I could take the next one in a month right before the next quarter was due. In the meantime, I needed to figure out how to submit my quarterly federal income taxes as a business owner. This also made no sense to me. I texted a friend who does massage work independently.
“Do you pay quarterly estimated taxes?” I asked.
“UGH I should,” he wrote back. “I’m always so far behind.”
This didn’t help me. Thus, I hit up another friend.
“I’d love to dig into the weeds of an issue with you but that’s just not going to ever happen,” this other friend wrote back. “I hate to say no to people. But I hate tax stuff more. If you need a recommendation for a tax accountant, I got your back. So Sorry.”
Oddly enough, I really appreciated his rejection. It clearly drew a boundary as to who he was and who he wasn’t as a friend. This guy is the “fun friend.” He’s the entertaining guy who brings the party - not the guy who brings the tax advice. I wish more people drew friendship boundaries like this.
I hit up the few more business owners and the answers were all similar - either they used CPAs or didn’t submit quarterly and ended up owing huge amounts at the end of the year. I couldn’t afford to do either.
This was totally left up to me and I didn't understand it. I don't know about you all, but when I struggle to understand something as necessary as this, I tell myself terrible things. I told myself that I was stupid. I told myself that I would NEVER figure this out. And I told myself I was going to fail at all of this.
At this point, I had started behaving like a Bowser. You know that guy couldn't have had a good self esteem. Otherwise he wouldn't run around trying to steal princesses all the time.
The day came for the sales tax class and I thought I would FINALLY get some clarity on at least this part. No such luck came to me, or any of the other students for that matter. The teacher was great. But she was brutally honest.
“There is a rule for everything,” she said. “And for every rule, there is an exception.”
To give you an idea of how bonkers this got, at the end of the class, a girl asked a specific question about selling beauty products online (or something like that). I overheard the teacher say “...unless you’re selling eyelashes. If you’re selling eyelashes then that falls under a different rule.” EYELASHES HAVE THEIR OWN FUCKING RULES?!?!? This was out of control!
But the teacher did say something that gave me hope. “All of us who work at The Department of Revenue are here for you guys. Even if you need one-on-one counseling, call us or come on in. We will always answer your questions.”
This almost sounded too good to be government. As people asked her to repeat this, in disbelief, she explained.
“Of course we will help you. We WANT you to succeed as a business. Because if you succeed as a business, that means we get more money!”
Now THERE was the government. It didn’t matter though. I just needed to know that I was supported in my attempts at entrepeneurialship (now there’s a worthy Scrabble word if you can ever pull it off). And learning about taxes had left me feeling completely... taxed.
For the quarterly income taxes, I finally broke down and called my father (yet again). He had done some independent medical consulting during his career in anesthesia. But it had been quite a few years since he retired and he didn’t want to give me inaccurate information.
Dad told me to calm down. He said that if I wasn’t sure, just to send in 20% to federal and 5% to state. If this was too much, then the IRS would pay me back. Besides, I didn’t necessarily need to worry about it this time around since I only made $60 for the entire quarter. I might have taken a lot of deductions.
When I sat down to complete the online sales tax form for the current quarter, I took a deep breath. I understood now that, being a smaller business, I didn’t need to worry so much about the rules - just how to plug in my numbers to the online form. But once again, I was faced with not knowing how to fill it out for multiple counties.
I picked up the phone and called the Department - just like the teacher had told me to. A nice gentleman answered and he walked me through how to add multiple counties to my form. Suddenly, it all made sense! I got off the phone and filled out the form perfectly. I submitted my form and paid the sales tax and an incredible feeling washed over me.
As exhausted as I was, I just successfully completed one of the most mind boggling things on planet earth. I worked and worked and worked at trying to understand this and somewhere along this journey, it clicked in my brain and I made it happen. I felt like a total badass.
In the end, I didn’t just throw in the towel. I didn’t quit trying to understand the business side of being an independent writer. And I didn’t just toss it in the hands of a CPA I couldn’t afford (bless you people for the work that you do). I actually did this myself and it was an incredibly empowering feeling.
I ended up learning that, when you put in the effort to figure out such complicated things, you become less dependent on others doing such things for you. There’s still a lot of questions and confusion I’m dealing with (in case any of you think you might be able to help). But I can legitimately say I am excited to learn more about taxes and get even better at handling all of this.
If I can truly reach success as an independent writer, then I imagine things will get complicated enough that I will have to use a CPA. Though, by then, I should be able to afford it. For now, I have stopped feeling like a Yoshi or a Bowser, and instead, starting to feel like a Mario.
PS - If you aren't familiar with Super Mario Bros., then I apologize for my analogy. Also, if you aren't familiar, I apologize for your childhood. *winky face*
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