Small Business Tips: Strategies to Reduce the Stress of Next Tax Season
When tax season rolls around, many individuals and business owners feel ill-prepared and financially stressed. Often our best intentions for a more streamlined tax prep fly out the window once the annual process is complete.
As one tax season comes to an end and another one begins, it’s the perfect time to implement some simple organizational strategies to make your tax process less stressful for next year. Forming a healthy financial habit takes time, so starting now will ensure that when the next tax season rolls around, you will be ready for it.
Tax-Friendly Habits in Daily Life
Whether you are a business owner or an individual taxpayer - or both, you can adopt some good habits that will reduce the burden of your filing experience. Developing a structure for your records is a good place to start.
Organizing your files can be less daunting than it may seem. This handy guide from Public Storage suggests categories for your filing system (such as bank accounts and retirement plans) and indicates the types of material to file into those sections. The guide also explains how long one should keep this information stored.
Sometimes it can be stressful to figure out which tax forms you need to file. This is where a tax professional can be extremely helpful. If you own a small business and have hired independent contractors, or have paid a minimum of $600 in any number of categories to non-employees (including rent, awards, medical payments, etc.) you are required to file a 1099.
The 1099 form is now a miscellaneous and non-employee filing category. It covers a range of expenditures that small businesses may encounter throughout the year. Be sure to pay attention to changes in 1099 forms as you file 2020 taxes since these recent form changes may impact the way you file.
Simplifying Your Filing Process
Business owners who use an online payroll system like QuickBooks can benefit from the simplicity of filing tax forms electronically. The beauty of using an online payroll system is how easy it is to pay contractors and e-file taxes.
To efile 1099 forms, you’ll find that this can be a simple three-step process. Your payroll software can communicate information easily with the IRS and your independent contractors, thus reducing stress and allowing you to focus on operating the company rather than juggling financial forms.
Managing Stressful Money Moments
Financial stress impacts every small business owner and can negatively influence their motivation to run their business. While it may seem inevitable, financial stress doesn’t need to steal your mojo.
It may be worthwhile to consider talking with a business consultant or chatting with a mentor in your field. Revisiting your business plan with a respected peer can uncover areas in which you may have inadvertently moved away from your mission and financial goals.
Weekly habits for financial health can prevent small problems from becoming enormous. Set aside one day per week to take a quick review of your business expenses, income, and cash flow. Use this time to file paperwork into the proper categories and re-establish an understanding of where you stand fiscally.
Successful business owners frequently check their compliance with the budget plan and expenditures; they pay themselves, as well as the mortgage holder and tax fees as part of routine practice.Keeping an eye on your finances regularly can prevent you from feeling overwhelmed when tax season rolls around. Implementing strategies for monitoring and organizing your financial health can be a game-changer when it comes to stress reduction and tax preparation. You can reduce your tax stress by consulting a trusted financial professional.