No one likes to deal with taxes each year. The rigmarole of gathering information, submitting documentation, and making sure that you’ve crossed all your t’s and dotted all of your i’s can feel like a lot of work — even on an individual basis.
When you need to do all of that as a small business owner, the process can feel downright overwhelming. If you’re a small business owner that has struggled to manage your taxes in the past, here are some suggestions for ways to make tax time less daunting going forward.
1. Use the Right Tools
One of the perks about today’s business environment is that technology makes many tasks easier to complete. But many tools are expensive, and some can be complex to use, so you should carefully research potential solutions to make sure they’ll have the impact you expect.
There are many ways to use technology to ensure the taxman gets everything he needs. For instance, consider one of the many cost-effective payroll software tools on the market. These aren’t just good for paying your employees every week or two, some also organize tax information and year-end reporting.
If you like to handle your own taxes, there is no shortage of small business tax software. Many offer user-friendly dashboards that streamline processes and keep you up-to-date on tax law changes. Some applications can also track mileage, business expenses, and then auto-generate tax forms at the end of the year.
Whatever your need, there is no shortage of tech tools to help you with your taxes. Do your research to find the best ways technology can help in this area of your business.
2. Be Proactive
Yes, it’s absolutely easier to tell someone to be proactive than to do so yourself. But that doesn’t change the fact that being proactive during tax time can make the entire process much easier. This is true for multiple reasons.
First, if you start gathering tax data and documentation early, it can spread out the total workload. Rather than trying to do everything all at once (and often at the last minute, no less) you give yourself plenty of time to pace your tax process.
Second, being proactive can mitigate one of the worst side effects of tax season: stress. 52% of Americans claim that they think filing taxes is stressful.
This may not come as a surprise. Nevertheless, most people ignore the reality and plow ahead with the same, procrastination-driven approach each year. By proactively planning in time to start your taxes first thing in January, you give yourself the time to think things through.
The truth is, if you start gathering tax data in January and February, chances are you won’t be able to get everything you need right away, anyway. Rather than using this as an excuse to wait, start the process early, do what you can, and then take a forced break as you wait for the rest of your tax information to become available.
3. Find Professional Help
We live in a world where independent contractors are readily available and very affordable. Even if you can’t afford to hire a CPA full-time for your company, you can contract an accountant to help you get through tax season.
This may feel like an expensive proposition that you don’t want to invest in. But make sure you consider your situation holistically before you assume hiring a professional isn’t worth it.
Corporate tax returns cost hundreds of dollars to file, regardless of whether you did the paperwork or not. So, when you don’t hire a professional, all you’re really saving is a few hundred dollars in fees — the cost of which you most certainly are redistributing elsewhere.
For instance, if you opt to do your own taxes on your own, you need to spend more time on the activity. This will take away from your ability to focus on your revenue-generating business.
In addition, if you take the responsibility of your taxes on yourself, it will add to that burden of stress. Feeling stressed isn’t just uncomfortable. It’s estimated that job stress costs American companies $300 billion each year.
Rather than paying the tax bill through time and stress, consider hiring an accountant to help. This will free up your time, reduce your stress levels, and let you rest in the peace that you know you’ve covered all of your bases.
Taxes are never fun. However, they don’t have to be a daunting part of your small business owning responsibilities — at least, not if you take steps to minimize their impact. There are many ways to do this. To recap, you can:
- Use technology to streamline the data- and report-related parts of your tax activities.
- Use proactive scheduling to give yourself plenty of time to handle your taxes.
- Use a professional accountant to reduce the burdens of time and stress that taxes can create.
The reality is that you need to figure out your taxes every twelve months, without fail. If you can make an effort to organize and strategize this process, it can help you finish your taxes in a quick and efficient manner every time April 15th rolls around.