Are you feeling stressed out about your business’ taxes?
For many small business owners and entrepreneurs, this is the worst time of year. Everyone gets stressed out about their taxes, but if you’ve never done the taxes for a small business before, you might be more panicked than usual. Add to that the usual headache of having to do your personal taxes, and it can lead to a stressful month. But it doesn’t have to be!
There are processes you can put into place that will help you get your taxes done quickly & efficiently. Worst-case scenario, hiring a tax professional can be a worthwhile investment for a business of any size. Here are some of the tips I use to get rid of anxiety during the tax season, while also making sure I finish everything well ahead of time. (ok, so this isn’t exactly true, as I am the king of procrastination and not a big fan of the IRS)
As an entrepreneur, one of the most valuable lessons I’ve learned over the years is to minimize stress, anywhere I can find it. If something is causing anxiety at your business, it’s best to figure out ways to get it off your plate as soon as possible. Social media is an excellent example of this. Interrupting your workflow countless times a day to post something on your business’ Facebook page can do much more harm than good. Hiring someone to do it or scheduling them all ahead of time can be a great way to cut down on stress.
With that in mind, few things are as stressful as your business’ taxes, especially if you’re starting a new business and have never done them before. The newer you are to the world of entrepreneurship, the sooner I would suggest you start with tax preparation. You need time to make mistakes and learn without feeling that you are under a tight deadline. If you start working on your taxes in the middle of March, you are going to be hearing that ticking clock every step of the way. If you start in February, you’re going to have lots of time, and therefore, less anxiety.
Hiring someone to do your business’ (and potentially personal) taxes is, by far, the easiest way to eliminate the anxiety that goes along with having them due. However, this doesn’t mean you relinquish your responsibility to them entirely.
After all, it’s your job to select the person you want to do your taxes. Obviously, you don’t just want to pick someone at random. You want a qualified expert who, ideally, has experience in your field and industry.
This strategy requires some research and footwork ahead of time to be successful. In March, every available tax professional is going to be occupied with their clients’ taxes. If you start your search in December or at the beginning of the year, however, you should be able to find the perfect person with time to spare. Even better, once you’ve found your tax professional, you can continue to use them in the future if you approve of how they handle your finances this year.
As a new business owner, you have many responsibilities and projects to juggle. If you don’t have systems in place, lots of things can get misfiled, like invoices, bills, and other critical financial documents.
One of the reasons for this is that many new entrepreneurs treat their business’ financial documents like they do their personal ones and put them in an old shoebox. First off, using a shoebox should NOT be the way you do your personal taxes. Second, they should DEFINITELY not be how you organize your business’ financial records.
My advice would be to go entirely digital with regular backups to a secure cloud service. That way, it will be impossible for any physical documents to get deleted accidentally or misplaced. This strategy will also make it easier to get everything to your tax professional to take care of your taxes.
It doesn’t need to be a complex system either. Just create folders for each month of the fiscal year and put any invoices, bills, or other docs into them as you go. Once February or March comes around, you will be all set. Just review to make sure that everything important is there, and send them off!
Something I’ve found as an entrepreneur is that you must have a solid understanding of your finances. Even if you hire someone to take care of your taxes for you, you should still review everything yourself. Not to check for mistakes or anything like that, but so you understand what is happening with your company’s finances.
Learning about applicable rebates, tax credits, exemptions, and deductions is vital for your business’ financial health. By keeping those in mind, you could potentially be able to save even more money in the upcoming year. If you don’t have a financial background or taxes stress you out, possibly hire someone to walk you through them. It’s money well spent!
Now, I’m not even going to begin to pretend that following these tips will reduce your tax anxiety to zero. It’s going to be stressful, regardless of how prepared you are. It’s going to feel like you need to give too much money to the government, or you thought that you qualified for more tax credits, or that your CPA is cutting it awfully close. Remember, I said above that the key is to minimize and mitigate stress, not eliminate it entirely.
I know what it’s like to have to deal with your business taxes for the first time, and it isn’t fun. But over time, and by hiring experienced professionals, it will simply become part of being an entrepreneur.
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