Now that tax season is officially over, it’s time to reflect on how things went. Some questions to ask yourself:
- Were you prepared?
- How did you feel – stressed/ready/scared/on top of it/like a rockstar/etc?
- Do you feel there are changes that need to be made before next tax season?
If this tax season left you wanting to curl up in a ball and cry, let me tell you something – it doesn’t have to be that way! Say it with me… “tax season doesn’t have to suck!”. In fact, it can be a breeze.
For a moment, imagine a world where taxes don’t stress you out. You have a plan in place and you diligently set aside a percentage monthly to save for taxes. Your estimated quarterly tax prepayments have been made and when it’s time to file, you already know what’s coming. You have it in the budget and it’s in a separate account, so it doesn’t even hurt when it comes out of your account.
I promise this is possible and if this sounds like you, read on because we have the recipe for a stress-free tax season.
Prepare, Prepare, Prepare
There’s nothing worse than getting closer to tax season and running around like a chicken with its head cut off, trying to find all the tax documents you need, and quickly sending a million files and receipts to your tax preparer (please don’t do this…). I know taxes can be intimidating, but they’re so much more manageable when you take a little time to prepare for them ahead of time!
Here are a few tips you can implement to have you ready and prepared come tax season:
- Put 25-30% of your profits into a separate savings account each month to save for taxes. On a quarterly basis, you should pay quarterly estimated tax payments (speak with your tax preparer for help with filing these!)
- If you don’t have a tax preparer already, start looking now so you can take your time and find the person that is right for your business.
- Keep track of your business-related miles so you can claim that deduction.
- Make sure your books are in order (this is where we come in). It’s so helpful for your tax preparer to receive books that are organized and accurate, and will make tax season less stressful for everyone! We suggest bookkeeping is done on a monthly basis. It’s a whole lot easier to remember what you purchased 2 weeks ago than it is to remember 9 months ago.
- Implement a receipt management system – this could be as simple as snapping a picture of physical receipts and storing them in a Google Drive folder or having a dedicated program for organization (we love Hubdoc!)
- Dedicate time to learn about your finances. I guarantee it will be a whole lot easier (and maybe even fun!) when you understand what your numbers mean and how they affect your business.
A stress-free tax season starts with preparation. Start earlier than you’d expect and be consistent – future you will thank you when next tax season is easy and straightforward!
The content in this blog post is provided for general informational purposes only and should not be considered professional tax or legal advice. The author is not a Certified Public Accountant, and no assurances can be made regarding the outcomes or consequences of tax returns, IRS actions, or any financial decisions based on this information. Readers are strongly advised to consult with a qualified tax professional or legal advisor for personalized guidance specific to their individual circumstances. The author expressly disclaims any liability for decisions made based on the information presented in this blog post.
