Owning and running a business is stressful year-round, but there’s no doubt anxiety spikes around tax season each year. And for good reason. Most small business owners simply don’t have time to take away from their businesses, but that’s exactly what they have to do during tax season.
And while most Americans prepare their taxes with only their individual concerns in mind, small business owners must consider their employees’ financial safety as well. One mistake in the business’s financial records could derail tax filing for every employee. No wonder small business owners are stressed!
But not to worry. There are many steps small business owners can take to reduce their tax time stress. So, take a deep breath, keep calm, and heed the advice in these tips:
Prepare to prepare. You’ve probably heard this many times before, but it’s true: The best weapon against tax time stress is preparation. That means keeping solid records throughout the year. Rather than rely on hard copies, keep invoices, expense reports, and employee payroll information in your cloud. That way when you have a question about finances during the course of the year or while you’re doing your taxes, the info will be much easier to search. Then, designate time on your calendar near the beginning of the year to go through your digital archives to make sure you can have everything ready for your accountant when it comes time to do your taxes.
Know your tax preparer. You might be thinking, I’ve used the same accountant to prepare my business’s taxes for years. Of course, I know them. But have you really taken the time to build a relationship with them? At the end of the day, you’re the one who’ll have to take responsibility for the tax return you file with the IRS. Do you trust your tax preparer to avoid risky deductions? Do you feel comfortable calling your tax preparer with questions throughout the year? Do they understand your business and how it operates? These are questions you should ask yourself when assessing the folks who are prepping your taxes. Knowing you have the full support of a highly qualified tax professional can lift a huge weight off your shoulders.
Avoid tax forms overload. W-2s. W-2Cs. 1099s. W-3s. 941s. 940s. The alphabet/numerical soup of tax forms is enough to send one screaming for the hills. Thankfully, over the years a lot of great software has been developed to reduce the headache of filling out and filing the mountains of paperwork small business owners must handle while prepping taxes. Even better, some available W-2 and 1099 software is updated based on new tax requirements, e.g. the Affordable Care Act reporting. So, in addition to making it easier for you to simply prepare the forms, updating your software can help you keep up with changes in tax code and avoid penalties for non-compliance.
Set aside some “you” time. When you’re in the throes of tax prep, it can be easy to have a one-track mind. But it’s important to prioritize self-care, especially as your stress levels increase. Of course the old stand-by apply—eat healthy and get plenty of exercise—but there are other ways you can manage your stress. One of them is meditation. The practice has been proven to reduce stress and improve mood. And it can be done without ever leaving your office and with just a couple minutes of your time each day—so there’s no excuse for avoiding it.
Tax time is probably never going to make anyone jump for joy. But it doesn’t have to be completely unbearable. When you take a few key steps ahead of time, you can minimize your stress levels and relax a bit when April 17th rolls around.