Surviving Tax Season

Surviving Tax Season: A Guide for Small Business Owners

We are nearing the end of tax season, which has some small business owners scrambling to finish the details before the upcoming deadline. Tax season is a necessary part of business ownership, but it can be a stressful experience if you don’t have the paperwork ready for your accountant. Whether you are relieved to be done with your tax filing or you are working hard to wrap up the details, there are a few things that you can do to survive this stressful time of year.

Why is Tax Season So Stressful?

Many business owners spend hours sorting through paperwork, trying to make sense of the transactions for the year. It is common for bookkeeping and accounting practices to get pushed to the backburner, resulting in a situation where there isn’t an organized log of the receipts and invoices. Not only do you need to sort through the paperwork, but everything needs to be categorized and recorded. The paperwork needs to be kept on file in case documentation needs to be provided for an audit in the future.

Stress often comes from the long hours of sorting through transactions and trying to remember everything that needs to be documented. At the same time, it is common to feel stress about the tax bills that need to be paid.

During this time of year, you need to keep up with the regular business activities and juggle the extra work that is needed for tax preparation at the same time. Stress levels go up because of the extra time that is needed to get everything done before the looming deadline.

Managing Your Stress During Tax Season

Just because it is a stressful time of year, doesn’t mean that you need to bear the burden without managing your stress. Here are a few tips to help you manage tax season:

  1. Be Aware of the Deadlines: Knowing the deadlines will ensure that you don’t miss the most important days of the tax season. If you miss a deadline, then your stress levels might go up even more because of the extra fees and interest costs that will need to be paid for a late filing. The normal income tax filing deadline is April 15th. But, this year the 15th falls on a weekend, which means that the IRS changed the deadline to make it a business day. In 2018, the final day for tax filing is April 17th.
  2. Create a Tax Schedule: In addition to the tax filing date in April, there are other deadlines throughout the year for quarterly taxes, Medicare, Social Security, and more. Tax season is a good time of year to assess your schedule and make sure that you are staying ahead of everything else. If you miss these other deadlines during the year, then your stress levels will go up when the work is being done during tax season you and find out that there are extra payments that need to be met. Right now is the perfect opportunity to create a schedule that you can follow through the rest of the year. Your accountant will provide recommendations for the best schedule that will meet your needs.
  3. Make it a Priority: As you are working through the regular activities of running a business, it is easy to let your tax preparations fall to the bottom of the to-do list. When you are dealing with employees and customers in face-to-face conversations, the busy work often gets pushed aside. Taxes should be a high priority so that you don’t miss the deadline. So, you should set aside time in your schedule to focus on the tax preparations that are needed. Even if you have a good accounting team to help, there are still a few things that you need to do to prepare the paperwork for the filing. Your accountant will be waiting for you to supply the necessary information.
  4. Provide Organized Information: It’s not going to work if you try to hand your accountant a shoebox full of receipts. When you have a year of transactions, you need to be able to categorize the spending and break everything down so that the accountant can understand the numbers. Organizing the information is essential to ensure that you don’t miss important details that need to be included in the tax filing. The easiest method is to keep all of your tax information in one location, such as an online software system that is used throughout the year to track your spending. In addition to providing the details for your accountant, you also need to maintain these records in case the IRS asks for additional information.
  5. Separate Business and Personal Transactions: It is easy to let the business and personal transactions get mixed together, especially when you are starting a home-based business. The IRS is strict about the mingling of business and personal transactions. If you don’t already have a good strategy, right now is the time to separate your business accounts and personal accounts. Set up a business credit card so that you can keep business-related expenses separate from your personal
  6. Look for More Deductibles: Are you feeling the stress of a high tax bill this year? If you are looking for ways to come up with the cash to pay the bill, then you might talk to your accounting team to identify additional deductibles that can be calculated into your return. Some of the hidden deductibles can make a big difference to the amount of money that you need to pay. For example, you can write off expenses for new computer equipment, business travel, furniture, meals, insurance costs, employee expenses and more. Don’t overlook a penny that was spent on business activities. If the money was spent to support your business efforts, then it can be counted as a deductible on your tax return. Talk to your accounting team if you have questions about whether specific expenses qualify as tax write-offs.
  7. Leverage Online Tools: Don’t make the mistake of trying to calculate your business expenses with a hand-written ledger. There are many tools available that can be used to calculate your income and expenses. You should talk to your accountant for recommendations about the right tools that should be used for your industry. It might be too late to implement these tools for the current tax filing. But, you shouldn’t overlook the benefits of using software tools to help you prepare for next year.
  8. Talk to an Accountant: Whether you have a home-based business or a start-up with a physical location, it can be a big mistake to attempt a DIY tax filing. Some people are tempted to file taxes without professional assistance because they are looking for ways to save money. A tax preparation fee might feel unnecessary. But, the truth is that this service can be an essential way to help you avoid problems in the future. You will reduce your stress levels by passing the bulk of the work to a professional team, allowing you to focus on other important business tasks instead. Plus, you can trust in their expertise to ensure that you don’t miss potential write-offs. Many business owners find that tax preparation services are a great investment because of the reduced tax burden that needs to be paid.

Staying Ahead of Tax Preparations

Even though you can’t turn back the clock to change how you prepared for taxes this year, you can set a few goals to be better prepared next year. Right now is the time to find the motivation to make a change. Consider the stress levels that you are experiencing during this tax season. Then, imagine what it will be like to file taxes next year if you already have the information organized and ready for your accounting team.

You don’t have to implement this system without assistance. Hiring a year-long bookkeeping and accounting service is one of the best investments that you can make for your company. You should be talking to your accountant throughout the year, instead of waiting for tax time to have a few brief conversations. Consistent support from a financial professional is one of the most effective ways that you can stay ahead of your business finances and minimize the stress that you experience when it is time to file your taxes each year.

Ongoing accounting services give you the insights and tools that are needed to maximize your deductions. These transactions are tracked each day, week, and month. Then, you can run a few easy reports when it is time to calculate the numbers for your tax filing.

Do you have questions about filing business taxes? Do you need help with your filing? Our team at Easier Accounting is always here to assist. We specialize in small business accounting, giving you access to the expertise that you need to support your business efforts. Call to learn more about the ways that we can help throughout the year: (888) 620-0770

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