3 Pre-Tax Season Tips to Keep You Sane in 2019
With all those tough questions to consider, it’s no wonder 42 percent of small business owners say planning ahead for what they’ll owe is the toughest part. That’s according to a recent survey by QuickBooks Payroll. But don’t worry, business owners can certainly take away more than just gloom and doom from this tax-centered study. Here are three facts and three tips to take the stress out of tax season in 2019.
How to Make 2019’s Tax Season a Breeze:
Fact: Nearly 40 Percent of Business Owners Don’t Use an Accountant
If you don’t use an accountant or CPA to help you file your business’s taxes, you’re not alone. Many small business owners wear every hat that their business requires, from hiring manager to payroll expert to accountant.
And no wonder! According to USA Today, 20 percent of small businesses fail in their first year. Often, what gets a business by is thriftiness — opting to do the work yourself rather than paying someone else to do it. For a lot of small business owners, that’s a tough feeling to shake, even when profits are up.
Still, even despite the fact that thriftiness can benefit new businesses, there are several pieces of evidence that reveal that it’s better to hire someone else for tasks that aren’t either in your expertise or pay grade. In fact, when it comes to taxes specifically, the data doesn’t lie: small business owners should give their books to a knowledgeable accountant.
According to the QuickBooks survey, 85 percent of those who do use an accountant said having one has saved them time and money, reduced their stress, helped with compliance, and allowed them to plan ahead.
Tip: Hire a Trained Professional
Rather than trying to muddle through taxes on your own, hire an accountant who knows the ins and outs of write-offs and forms. It might cost a little extra in the short term, but what you’ll save in stress is absolutely priceless.
Fact: 1 in 4 Business Owners Procrastinates on Their Taxes
Whether they’re using an accountant or not, 25 percent of small business owners say they don’t even start thinking about taxes until one to two months before they’re due. While some owners might be fine to delay the inevitable, others may be putting themselves at a disadvantage.
Late filings, for instance, put businesses at risk of missing critical deadlines — something many business owners are well aware of. In fact, 33 percent say paying attention to deadlines is the most stressful part of tax season.
Unfortunately, deadlines aren’t the only concern. Leaving taxes until the last minute may keep some businesses from compiling the documentation needed to claim certain deductions. That means those who need the cash most may also be the ones leaving the most money on the table. Considering 36 percent of survey respondents said they could be making better use of deductions, chances are good your business could be amongst those missing out.
By contrast, 41 percent of small business owners say they start on their taxes more than six months in advance, and half of those start one year ahead of time. While the “sweet spot” is likely somewhere in between, the lesson here is pretty simple.
Tip: Get Ahead of Tax Season
If you have an accountant, ask them for their preferred schedule. Otherwise, and perhaps especially if you’re filing without professional help, consider taking the time to read about the new tax law. Research the changes to deductions and write-offs so you know how to best approach this tax season. Then, start early. Even if it only takes you half as long as you thought, it never hurts to get that tax refund early.
Fact: 10 Percent of Business Owners Know Nothing About the New Tax Law
If you’re part of the 10 percent of small business owners who haven’t heard of the 2017 Tax Cuts and Jobs Act, you have a bit of catching up to do, and you’d better hurry. The law goes into effect for the first time this tax season, and a lot has changed.
Fortunately, about a third of small businesses say they’re expecting good things. Slightly less say they’ve heard of the law but aren’t sure what to expect, while a smaller group feels it could be bad for business. When QuickBooks asked business owners how they think the law has affected profits, investments, and taxes, most responses were positive. Over half (56 percent) of business owners said profits have gone up, 55 percent said investments have gone up, and 53 percent said they’re expecting to pay less in taxes.
Tip: Educate Yourself in Advance
Don’t go into the 2019 tax season blind. The more prepared you are, the easier your filing will go. Plus, being able to discuss all the ins and outs of the new tax reforms at the company Christmas party is sure to make you the most popular person at your table.
Do you have any other pre-tax season tips to share with fellow business owners? Let us know in the comment section below!
Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author's alone, and have not been reviewed, approved, or otherwise endorsed by any of these entities.