Authored by Phil Cohen
Tax season is upon us and small business owners across the US are frantically gathering their documents and stressing out over their business’s finances. Filing taxes for a small business is never pleasant. While tax season can be difficult for small business owners due to all the rules and regulation, it does not have to cause physical stress.
Although filing your small businesses taxes can be complicated, there are many ways to make sure you’re organized and complying with all of the correct processes in filing your upcoming taxes. Look forward to a stress-free tax season when using these tips, even use them as a checklist when starting to think about the upcoming tax season.
7 Simple Ways to Make the Tax Season Easier on Your Business
Organization is key
Organization is essential when running a small business, it’s even more important when it’s tax season. Staying organized can help you relax and know that you are taking all of the right steps in filing your taxes. You need to have all documents pertaining to revenue and income organized. The last thing you want to be doing is scrambling for receipts, mileage and other important documents at the last minute. Having dedicated folders for specific documents will help you stay organized.
Be sure to keep all of your business receipts throughout the year in a safe place because come tax season, you will need them. Using checklists provided by professionals as resources to stay organized is helpful. Following checklists will also minimize your fear of forgetting something or doing something wrong.
Following a step-by-step guide will help small business owners have peace of mind knowing they are following the right process. The IRS offers free tax preparation help as well as changes in the process that are new this year for small business owners.
Keep your business finances separate from personal
Keeping individual and business finances separate is very important. You should have two separate bank accounts, one for business and one for pleasure. If you are a new small business owner and this is not yet an option for you, try to have two separate credit cards. One for business expenses and one for personal expenses. It’s also important to keep your business receipts and mileage separate from personal. This way, when filing taxes, you will not have to separate out your business expenses from personal.
Seek professional advice
Even if you are handling your own company’s taxes, there’s nothing wrong with working with a tax professional to guide you through the process. IRS requirements are always changing and tax verbiage can be complicated so talking to a professional is beneficial for your business. Professionals suggest business owners should compare their profit-and-loss margins to the prior year tax season to avoid underpaying on their taxes.
If you’re afraid you can’t afford an accountant to do your taxes, other options are available to you. For a lesser fee, you can speak with an accountant for advice and not have them complete your taxes. You can also live chat on many tax websites and available professionals will answer your questions at no cost
You can use services like Turbo Tax and H&R Block which are user friendly, they have professionals on hand to answer any questions you may have. However you choose, be sure to read carefully and don’t be afraid to ask for help if you have uncertainties.
Start preparing tax documents early
The earlier you start getting the required documents together the better. If you realize you’re missing something or make a mistake, you’ll have plenty of time to go back and fix it. Once you have your tax documents in order, everything will begin to fall into place. Additionally, you are going to want to be aware of any tax deduction opportunities that apply to you and your business. There are a lot of requirements for small business tax filing, but using checklists and the help of accounting professionals will smooth out the process.
Break up the tax preparation process into sections
If you start working on your taxes early, you will have additional time to break up the process into manageable pieces. Staying on a schedule can make life a lot easier. Dedicate different days to specific filing tasks and set a certain amount of time aside each day to work on your company’s taxes. Completing a little bit each day can make the process less stressful, more organized and seemingly go by quicker.
Avoid burnout
In addition to dedicating time to work on your taxes, dedicate another part of the day to a personal hobby or a healthy relaxation method that helps you calm down. This will help you avoid getting burned out and increase your likelihood to stay healthy during tax season. Each person must find stress relievers that are right for them, there is not one universal solution for everyone.
Some things to try can include exercise, mediation, getting massages, healthy eating and listening to music. It’s important to stay healthy during tax season, stress can weaken your immune system and increase your susceptibility to depression, anxiety and sleep problems. Eating healthy and exercising a few times per week will decrease these risks.
Use smart phone apps for tax help
Technology is advancing quickly and there is no longer a need to enter all of your receipts and mileage by hand. There are apps for that. Shoeboxed’s app scans and categorizes receipts by amount, vendor and payment method and then files them according to tax category. This app creates expense reports and tracks mileage. The initial app is downloaded at no cost but there are some in-app purchases.
Evernote is another popular organization app. Evernote takes notes and keeps your documents categorized into notebooks. Evernote can be helpful for small business owners who like to stay organized by keeping notes. You are able to organize your notes into folders within this app. You can have a tax folder and then subcategories based off the main folder. You can even file your receipts into this app by combining it with your receipt keeping apps.
But wait, there’s more…
For business owners who are using a professional accountant to do their taxes, it may be simpler to take photos of your receipts and mileage and keep them in Dropbox for easy access by your accountant. It’s also easy to track your tax returns through mobile apps as well. Several apps offer tax return tracking such as Turbo Tax, H&R Block and IRS2Go. These apps provide step-by-step guides which make filing your taxes quick and easy. There are a great deal of apps small business owners can download for organization and productivity.
Following these tax filing tips will help small business owners to stay organized and in turn will reduce stress. Just remember, organization is key. Staying organized during tax season reduces anxiety for business owners while preparing to file their taxes. Cheers to a stress-free tax season!
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