It’s less than 8 weeks until taxes are due. Do you know where all your paperwork is?
Tax season easily overwhelms us. For those new to owning a business, this is completely understandable: you’re not in “Kansas” with Form 1040-EZ anymore.
When we feel overwhelmed, it’s generally because we think something is going to be difficult. Why are taxes difficult? Because there are so many questions, questions that we likely need to dig up paperwork to answer. Also, because we fear we might owe money.
Tackle Small Business Taxes in Bite-Size Amounts
Here are our non-expert suggestions (with a little expert help) for how to make tax season—usually two months of fretting and sweating—less painful, and more profitable.
- Set small goals. Start by simply getting your paperwork in order. Set aside a half day for this, and don’t ask yourself to do anything beyond it (it sounds less daunting this way, and you’re more likely to do it).
- Get any forms you need and don’t have. If you plan to do your taxes yourself, or if you simply like to rough in the numbers before your accountant reviews everything, you’d better get to the post office or get on the IRS web site and order the additional forms you need now. Don’t forget that as a business owner you are self-employed, and will therefore have to pay your own Social Security and Medicare taxes (but don’t worry, there’s a form for this, too).
- Make an appointment with your accountant if you haven’t. Their calendar from mid-March to mid-April is filling up fast. So regardless of how much paperwork you still need to round up or how expertly you know your CPA will dash it all off quickly, it is probably best to sit down with him or her before April, so you have a couple of weeks to scare up any lost or misplaced data they may need.
- Set aside a “tax fund” in your coffers now. If you owed last year, or have any reason to believe you owe this year, it’s late but not too late to make sure you will have the liquid assets to pay. Of course, in case of emergency there are certain recourses: you can set up a short-term payment plan with the government, or take out a loan. But either will mean paying interest.
- If the amount you owe this year is big, there’s no time like the present to start a “tax purse” for next year. The IRS also provides these handy tax calendars for the self-employed and small businesses, whether you have to do taxes quarterly or just annually.