That madcap time of year we call tax season is here with a vengeance. Not all of us handle our tax planning the way we know we should, and for some, those yearly financial procrastinations have come home to roost.
We’re here to help you redesign your financial mental model—especially when it comes to tax planning. With these tax tips, you can revamp your financial habits and remodel your tax-planning strategies to take the pain out of next year’s tax planning.
Assuming a company’s fiscal year aligns with the calendar year, the tax season start date is January 1. By the end of January, inventories should be counted and W2s and 1099s should be sent out. This year, the filing deadline for corporations and LLCs is March 16. Sole proprietors have until April 15 to file their taxes. Get the scoop on deadlines for your 2019 taxes, or, if you’re struggling to stay on schedule, learn about filing an extension and whether your business qualifies. Each state has specific year-end tax filing timelines, so be sure to check your state’s department of revenue policies.
How long your business keeps its tax records depends on its filing situation. For businesses that file taxes regularly, the general consensus is to keep tax records up to 7 years. This article offers a summary of basic record retention rules. The IRS has specific guidelines on the matter.
For a business expense to be deductible, it needs to be “ordinary and necessary,” according to the IRS. You must keep receipts for anything you claim as a business expense. Take a look at these tips for staying on top of business expenses throughout the year so you save all the right information and paperwork without creating clutter.
Most tax-season pain points can be lumped into a few categories most of us can relate to. Let’s address three of the most common tax-time problems—and ways to resolve them.
There’s never enough time, it seems—especially for small business entrepreneurs. Expand your mental model to address this issue without having to do everything yourself. When it comes to tax prep, any task that’s repetitive, administrative, or simply takes you away from your core business strategy is a great candidate for automation or delegation.
Move the task off your plate by asking a few simple, if tough, questions:
Your time is valuable—especially as a small business leader. So, before you launch into detailed tax prep yourself, consider what an hour of your time is worth. Then determine just how much time the task actually takes: minutes, hours, or days? Is your doing that task really worth what it’s costing you to do it? Consider investing that time in something else with greater ROI or meaning.
Almost every task necessary to run a small business requires some know-how to complete. But not every task requires the level of expertise and know-how you possess. Think about the task at hand and the team you’ve hired. Could one of your employees tackle that task as well or even better than you, maybe at a lower cost? Have any of your employees asked for more responsibility or for a chance to try something new? What’s keeping you from passing the responsibility along to someone else? Keep your eyes open for members of your team to which you can delegate responsibility helping ease your workload and increase investment amongst your staff.
Take a look at the apps and software you already have. Could the technology you have on-hand help? If not, what would it take to find an app or software to tackle the task? Maybe an employee’s time to research and set it up? An initial outlay of cash to purchase it?
Odds are, you’ve said “yes” to one or more of these questions. Even an “I don’t know” opens the door to possibilities. The key to delegating a time-intensive task is to open yourself up to new tactics, let go of hands-on control, and stretch your team in new directions. You might also need to budget some cash to cover the cost of software purchase and setup.
The Clover App Market offers plenty of tools that simplify and automate common tax-related tasks. Many come at low or no cost. Check these out for starters:
You don’t have to be good at everything. You simply need to make sure your business runs as it should, and that the necessary responsibilities are met. When examining your mental model, stay focused on the things you do best and delegate or outsource the rest.
When delegating, start with your team. Determine if anyone has the ability to handle the task at hand. If not, reach out to other professionals. Keep in mind these two rules when it comes to successful delegation:
Take bookkeeping, for example. If you’re busy growing and running your business, you probably don’t have time to stay on top of Quickbooks updates, regular bookkeeping tasks, or even tax-related receipts. But that doesn’t mean you can’t keep your business books in order. Consider these ideas:
For most of us, tax season brings nagging reminders of financial habits and tax planning strategies we meant to jump-start for ourselves. Make sure that your mental model includes plans for growth and stability moving forward. Think about setting up a retirement account, an HSA, or an educational savings plan for example.
Whatever your chosen task is, start tackling it now, while the pain of tax prep is still fresh. Or table it until just after tax season or the down-cycle of your business. Be sure to enlist help getting educated. And remember to automate or delegate the task as much as you reasonably can.
Let’s say your task of choice is to set up an IRA. Consider outsourcing the setup to a financial advisor or use a robo-advisor for an automated alternative. Outsourcing or delegating the management of your IRA helps you reach your financial goals and stay free to do what you do best—lead your business.
As a small business entrepreneur, you don’t have to be the expert in every aspect of your business to create an effective business model or run a profitable company. You just have to be open to a mental-model redesign and know where and when to borrow brains.
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