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Tax filing can be stressful for anyone, but especially for small business owners, because the penalties for making a mistake in the process can be steep. With a good plan for managing the filing process, you can approach tax season anxiety-free, prepared to deal with any unforeseen obstacles that arise. You can also review the previous year to see what you might want to do differently to optimize efficiency for the next tax season.
Preparation is key to success.
Your tax filing season will go a lot more smoothly if you have prepared for it all year, and if you have closed out the year with an eye toward filing. If your records are organized, and everything correctly documented, this will save you a lot of time and stress. If tax time is approaching and you realize you haven’t kept your records organized, start as soon as possible to gather everything you will need in order to file quickly and accurately.
Learn all you can about payroll.
Payroll is not only the process of paying your employees, it also involves filing taxes. Therefore, it’s a good idea to fully understand payroll related terms to make the tax filing process easier. For example, make sure you know the difference between gross pay (what an employee earns before taxes) and net pay (an employee’s income after withholding taxes) – this is important for filing taxes correctly. You’ll also need to become familiar with the steps for processing payroll, which include gathering payroll information via Form W-4, calculating and issuing net payments to your employees, and of course, reporting and paying taxes.
Seek the help of a professional.
Whether you are tax-savvy or not, it’s wise to enlist an accounting expert either to handle your books for you, or to review them. You have diverse obligations as a business owner and can’t always manage to give your books the close and undistracted attention necessary for accuracy. Plus, accountants have a better awareness of how to save you money as well as avoid anything that might lead to an audit.
Streamline your processes.
One way you can make tax filing simpler is by integrating software as much as possible. If you are using payroll software, make sure it can link with your business account. Filing online will also significantly speed up the process, as well as ensure you aren’t skipping steps or cutting corners. If you still need a tax identification number (or EIN), try to get one as soon as possible, as this will help you keep your business records distinct from your personal ones.
Plan for success for the future.
Talk to your accountant about how things went over the past year, and whether you should do things differently this year to improve your filing process or save money. Your accountant will also be able to keep you informed about any changes to codes or tax law that will affect how you run your business.
Stay on top of your tax management plan, and don’t put things off, because waiting until the last minute will make filing more difficult and increases the risk of error. The more you dread a task, the more likely you are to put it on the back burner. Unfortunately, this tends to exacerbate anxiety. Putting off a problem instead of solving it can also make it objectively worse and more difficult to correct. And that will, in turn, make you dread the task even more the next time it comes up.
Have a stress management plan.
It’s important to have a plan in place for managing potential anxiety in a healthy manner. If you have planned well, you probably won’t have to deal with any unpleasant surprises, but even the prospect of deadlines can ramp up anxiety, which may trigger unhealthy coping mechanisms. Identify particular money stressors in advance and lay down ground rules for your own behavior in response to stress. Instead of turning to bad habits or simply avoiding or putting off the problem, be proactive. Seek healthy ways of managing stress, such as meditation or exercise, and talk to your tax professional about any concerns you have, rather than putting them off.
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