For most people, tax time only comes once a year, but for small business owners and the self-employed, it rears its ugly head in the form of quarterly tax payments four times a year. And because small business owners have so many worries on their plate, thinking about and planning for taxes can be an easy task to keep moving down the To Do list.
When I opened my first business, I did so without giving taxes much of a thought. Of course, when it was time to make my first tax payment that was something I deeply regretted. Over time, I got better at managing the tax-side of my businesses and even grew to appreciate the process. If you’re a small business owner overwhelmed with anxiety at the thought of paying your taxes, here are a few tips:
Take full advantage of a home business
If you run your business from home, take full advantage of the benefits that come with it. For example, depending on how much of your home is devoted to your business and how much business you do from home (e.g. do you use it to conduct client meetings?) you can claim the Home Office Tax Deduction.
Related Article: How to Maintain a Sane Approach to Taxes
The good news is that because of the growing sharing economy there are many options for entrepreneurs who want to start businesses out of their homes. For example, you can turn your love for dogs into a dog-sitting business. You might also convert your love of writing into a copywriting business or your knack for drawing into a graphic design business. There are many sites like Upwork where you can offer your services, or you can always tap into your social media networks to get hired.
While it can certainly be a bummer to send off a portion of your hard-earned money to the IRS, that isn’t usually where the anxiety and stress of paying taxes factors in for small business owners. From my experience, and in speaking with fellow entrepreneurs, the real drag is compiling all of the information you need in order to figure out your tax bill. Tracking down all those receipts, invoices, pay stubs, etc. takes a lot of time out of a business owner’s already very busy day. The best way to avoid that tax time stress is to stay organized throughout the year. Implement systems or use software that will help you keep track of all those details.
Don’t miss out on deductions
The bright light in the taxes tunnel are deductions, so be careful not to leave any of those stones unturned. As a small business owner, you’ll have many opportunities for deductions. In fact, Bankrate.com lists at least twelve deductions that you shouldn’t miss. Along with the home office deduction, you should also look for deductions if you’ve spent money on office furniture, supplies, or other equipment. You can also deduct insurance premiums, retirement contributions, and half of your Social Security contribution.
Don’t go it alone
When I opened my doggie daycare business, I was convinced I could do everything myself. If I can juggle managing three employees, attracting new clients, and helping to take care of a bunch of rambunctious pups, I reasoned, then doing my taxes should be a breeze. About 10 minutes in, I realized how wrong I was! I just didn’t have the skill set needed to effectively and efficiently do my taxes, and that was okay. I got a recommendation for a CPA from the owner of the business next door to mine and things got a lot easier after that. There is no shame in having someone else do your taxes. In fact, it’s probably the best way to ensure you take advantage of all the deductions and other credits that are available for you.
Paying your taxes may never be fun. But when you take steps to make it less stressful, you can ensure your tax worries don’t take valuable time away from actually running your business. And who knows, it may even lead to a very satisfying tax refund!
Author: Maple Cabot is currently pursuing her dream job as a motivational coach. She recently launched her blog where she writes about the importance of pursuing your passions, following your dreams – and letting inspiration in.