How to Never Think About Taxes Again
Tax season can be one of the most stressful times of year, whether you are self-employed or part of a women-owned business. Although there is probably no way to eliminate the stress of tax season, there are several ways we can help reduce it. In this article, we will discuss a few ideas to reduce tax stress and help you never think about taxes again.
Start Organizing Early
Whether you are self-employed or part of a women-owned business, starting early is one of the most efficient and effective ways to reduce tax stress, and can go a long way toward helping you never think about taxes again. An early start involves organizing relevant tax documents such as receipts and payroll and periodic checks to make sure the process is done properly.
Consistent organization is a great way to know your business is ready for tax season and to ensure your books are updated and accurate throughout the year. Consider using a weekly schedule to update and organize various parts of your accounting department.
The schedule need not take up much time as consistency is the key. Let’s take a look a sample schedule below:
- Monday – Record and verify income transactions
- Tuesday – Record and verify expense transactions
- Wednesday – Record and verify payroll documents
- Thursday – Record and verify petty cash transactions
- Friday – Reconcile bank and credit card statements with accounting books
If a weekly schedule takes up too much time, you can expand it to a bi-weekly or monthly schedule with each activity taking place on the one day per week you have the most time.
Consistent updates also keeps your team engaged, empowered, and can help the business flourish throughout the year.
Leverage Accounting Software
Accounting programs such as QuickBooks and Xero are exceptional tools that can improve the efficiency and effectiveness of your tax preparation.
For example, suppose you are self-employed or part of a women-owned business that engages heavily in online sales. Because you make sales in almost every state, your company is responsible for collecting and sending in sales tax in the states that require it.
QuickBooks can take your transaction data and prepare the correct amount of sales tax for each state, and even give you reminders when sales tax is due so you can send the payments on time. Without the software you would need to calculate sales taxes on each transaction for the relevant states. This process would take an inordinate amount of time.
Processing payroll is another feature that many accounting programs offer. Programs like QuickBooks offer package discounts if you integrate features such as payroll and sales tax. Other payroll providers that we recommend are Gusto, OnPay and Patriot.
Once you become familiar with the power of today’s accounting programs, you begin to see how they can help you never think about taxes again.
Use Available Resources
Today’s information age has made a tremendous amount of resources available to self-employed individuals and women-owned businesses. A simple Google search can give you information on tax rates, deadlines, and other useful information.
One way to help never think about taxes again is to educate yourself by using the materials available. For example, many tax services offer free webinars to self-employed individuals and other taxpayers to help uncomplicate the tax code.
Informing yourself and your team on new tax developments and how they affect your business can help with organizing important tax documents, and keep the team inspired and feeling empowered through an increased knowledge base.
Know Your Credits and Deductions
With all the tax changes over the last two years, many self-employed individuals and women-owned businesses have questions about what new tax deductions or credits they qualify for. For example, the Child Care Credit expanded and became refundable in 2021 because of the American Rescue plan.
Expanded paid medical leave, earned income tax credit, and additional provisions make researching or asking about the tax changes well worth the effort. It may also be a good idea to involve additional team members while doing this, similar to the discussion we had about staying informed.
Consult An Accountant or Tax Professional
Accountants and tax professionals make their living by being experts in taxes. Although it is an added expense, consulting them is a good idea if you have several questions and are not comfortable with handling taxes yourself.
Many accountants and tax professionals operate as independent contractors, so you don’t need to make a new full-time hire. Many self-employed individuals and women-owned businesses consult their accountants on an “as needed” basis which helps keep costs down and a valuable resource available.
Implement The Truly Profit Plan
The Truly Profit Plan is designed to help make managing your cash flow completely stress free, starting with implementing a tax plan. It is easier than you may think. By following the recommended process you will never have to worry about having the funds to pay for your upcoming tax bill.
The idea is that for whatever income you receive within a certain period, you set aside a pre-specified amount. In doing so you will have a nice reserve for any future tax payments. This is a big element in eliminating tax time stress.
Most of us would love to never think about taxes again. Even though this may not be attainable, hopefully our discussion has given you several ideas to help reduce the cost of tax season in terms of both time, money, and stress.
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