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When I came upon my first April 15th after starting my freelance writing career, I wasn’t sure what to expect. I was used to receiving a W-2 in late January and plugging that information into whichever online program was offering a sweet deal that year. In April 2009, though, I had one small W-2, a handful of 1099-MISC forms and no clue. Being used to doing taxes as soon as the forms arrive, and receiving a hefty refund, I was shocked when my tax program told me I was going to owe the federal government and the state of Georgia a sizeable chunk.

I had fallen into the new business owner trap – not paying attention to my taxes. Here are the lessons I learned from that crazy year. If you’re a first year business owner, this is for you! (I’m assuming you are a sole-proprietor or LLC. If you’ve incorporated, not all of this will apply.)

1. You ARE a business owner.

Even if you think you just freelance from time to time or resell cool vintage purses online, you are a business owner. If you made more than $400 during the year then you owe income taxes (federal, and possibly state) on that money. Those 1099-MISC forms you get from your clients? That income is reported to the IRS, too, and if you don’t pay income taxes they will eventually catch up to you.

2. You are responsible for taxes all year round.

As a W-2 employee, you always notice that nice chunk of change your employer takes out of your check for various taxes and “FICA.” Well, when you are self-employed, you are still responsible for remitting these taxes. Except now there’s no friendly payroll department to do it for you. This is where Quarterly Estimated Taxes come in.

If you are self-employed, in most cases you are required to remit a portion of your taxes due four times per year. But don’t panic! If your first year is fairly typical of most of us (i.e. you don’t earn that much) you are probably protected by a “Safe Harbor Rule.”  However, if this is your first year, a tax pro friend of mine on recommends putting a quarter of every check you receive into a savings account so you have the money ready at tax time.

3. You will have to deal with new tax forms.

Back when you were simply a W-2 employee, all you had to do was fill out the right form 1040 when tax time rolled around. These days, you’ll need to tack on – at the very least –a Schedule C (Self-Employment Income) and a Schedule SE (Self-Employment Tax) to your tax return.

4. You will owe more taxes now that you are self-employed.

Back when you were a W-2 (are those starting to seem like the good old days?) your employer helped offset some of your Medicare and FICA taxes (basically, you and your employer paid equal amounts, but they did the work of remitting both portions to the IRS). Those days are gone. You must now pay that, along with self-employment taxes you didn’t have to worry about before.

You calculate the amount you owe on Schedule SE, which carries over to the Schedule C for the business, reducing the income you worked so hard to make.  The tax amount you calculate on this form contains the FICA and Medicare taxes that were taken out of your paycheck when you received a W-2.  Now for a bit of good news:  You can take a deduction on your 1040 for half of your self-employment taxes.  So it’s basically a wash; you just have a bit more work to do on your tax forms.

5. You will need to keep track of receipts and other expenses.

The good news about being self-employed is that you can know write off business expenses such as office supplies, your home office space (be sure to check the rules on what qualifies as a home office, as they are very specific), advertising and marketing materials, business equipment and even gas and wear and tear on your car.

But if the IRS ever has any questions about your spending, you must be prepared to back your records up by hanging on to your receipts. File them away, digitize them or even use a service like Shoeboxed to make sure you keep all of your business receipts squared away.

6. You will make mistakes. Those mistakes can be fixed!

Maybe you should have paid quarterly estimated taxes, but didn’t. Maybe you filed a tax return last year and didn’t realize you could deduct expenses. If caught soon enough, these mistakes can be rectified. Knowledge is power when it comes to dealing with the quagmire that is your business taxes.

One final thought: You survived your first year as a business owner. While taxes can be intimidating, you are more intimidating. And don’t forget to ask for help if you need it. You can ask your tax questions at the Outright Community or contact a local tax professional who deals with businesses like yours.  Happy Tax Season!