How can I properly plan my tax prepayments?
July 26, 2022 | 40,00 EUR | answered by Eiko Hoffmann
Dear tax advisor,
My name is Günther Schröter and I work as a self-employed entrepreneur in the IT industry. In recent years, I have made good profits, which has led me to make regular tax prepayments. However, I have found that my previous planning was not optimal and I often had to make additional payments at the end of the year.
My income situation varies from month to month, as I carry out projects on a freelance basis and do not have fixed income. Therefore, I find it difficult to determine the right amount for tax prepayments. I want to avoid having to make high additional payments at the end of the year, as this puts a strain on my liquidity.
I am wondering how I can properly plan my tax prepayments to avoid unexpected additional payments. Are there specific methods or tools that can help me better predict my income situation and adjust the prepayments accordingly?
I would like to find a long-term solution to efficiently plan my tax prepayments and stabilize my financial situation. I would be very grateful for your expertise and advice on this matter.
Best regards,
Günther Schröter
Dear Mr. Schröter,
Thank you for your inquiry regarding the proper planning of your tax prepayments as a self-employed entrepreneur in the IT industry. It is understandable that as an entrepreneur with variable income, it can be difficult to plan the prepayments correctly to avoid unexpected additional payments. Indeed, efficient tax planning is crucial to maintain your liquidity and stabilize your financial situation.
To better plan your tax prepayments, there are various methods and tools that can help you forecast your income situation and adjust the prepayments accordingly.
1. Monitor income and expenses: It is important that you regularly monitor and document your income and expenses. This way, you can get a better idea of how your income is evolving and how much you are likely to pay in taxes.
2. Quarterly estimates: Instead of submitting an estimate for tax prepayments only once a year, you could evaluate your income quarterly and adjust the prepayments accordingly. This way, you can react more flexibly to changes.
3. Use of tax planning software: There are various tax planning software programs that can help you calculate and plan your tax prepayments. These programs take into account various factors such as your income, expenses, tax deductions, and tax rates to provide you with an accurate estimate.
4. Consultation with a tax advisor: As a tax advisor, I can help you optimize your tax planning and develop individual solutions for your specific situation. Through a thorough analysis of your finances and tax obligations, I can help you determine the optimal prepayments.
It is important that you regularly review and adjust your tax planning to avoid unexpected additional payments. I am happy to offer you a personal consultation to work together on a long-term solution for your tax prepayments.
Best regards,
Eiko Hoffmann, Tax Advisor
