Maybe you’re new in business, or maybe you’ve been doing it for ten years. Either way, having a game plan for tax season isn’t just a smart business decision, it’s going to benefit you in the long run. That’s why these top 5 small business reminders for tax season are going to save you! They’re good for wherever you are in life and business.
Before I get to the good stuff, let me preface this by saying, get yourself a CPA (certified public accountant), babe! It’s easy to think you can go at it alone, but there are experts out there who make it seamless and WILL SAVE YOU MONEY! It’s hard to know all the deductions, all the expense items you can or can’t get away with, and it’s nice to have someone double check your work.
Trust me, it’s a worth-while investment. And that’s coming from someone who considers themselves pretty damn good at managing money!
5 Reminders to Save Small Businesses Time and Money During Tax Season
All of these reminders are ones I have for myself too. Think of this not as tax advice, as I’m not a tax professional, but as a helpful plan for this coming season.
#1 Reach out to your CPA now for their checklist
All CPAs are different, and those that work with small businesses have a running list of what they’ll need from you. It’s great–and they’ll appreciate it–if you can get it to them as early as possible. No one likes to get an assignment the night before it’s due. Your CPA will more than likely be filing your business and personal tax returns (most single member LLCs and sole props have it attached this way).
Knowing that your CPA will be handling both returns, that checklist might include: expenses or receipts, documented mileage or home office (more on that in a second), any deductions like student loan interest or charitable donations etc etc etc. The list can go on! But having that information prepped is going to put both them and you in the best spot possible for getting taxes done on time.
So, don’t just skim over this, set yourself a reminder in your phone RIGHT NOW to email your CPA and ask what they want from you.
#2 Have all those small stats on hand
Like I mentioned above, make sure you have the correct information for the expenses of logged mileage, home office square footage, utility estimates, cell phone percentage used for business, and major equipment that you want to depreciate. Ask your CPA if these expenses are right for you. If they are, then they might not be receipted as clearly as a regular purchase. You’ll need to do some logging into other accounts and running some quick math for average numbers.
If you’ve been collecting all this information, here is your reminder to put it all in one place to hand over to your CPA. Pro tip: you’ll need the total square footage of your home AND the square footage of your office space used solely for business.
**Ultra pro-tip: Tax season is prime hunting season for identity theft. Now is a great time to get a VPN and encrypt your tax documents while you work**
#3 Taxes Suck
I’m with you on this one. We like to reap the benefits, but the collection of all this information and the paying of a boatload of money is not fun. I get it. So, here’s a little tip to let yourself have a break in the midst of taxes.
Go to Crumbl, get a cookie. Lounge on the couch while reading a book. You’ll get through it. And with a CPA on your side, it’s infinitely easier.
Something random that I do throughout the year is round up my tax contributions in my Bucket Method. For instance, if I tally that I should transfer $1213.00 to my taxes account, I’ll round up to $1250.00 so that at the END of tax season, I’ve over saved and I get to have a little bonus. Woot woot!
#4 After filing, ask your CPA what could have gone better
Set up a tax appointment (maybe after you’ve gotten yourself that cookie), and plan for ways to do better for next season. If taxes were especially draining, there might be ways to better prepare. And, there might even be ways to optimize your finances.
Whatever the case may be, use your CPA to make the whole process better for both of you. Team work makes the dream work, but you have to ask!
#5 When you don’t save enough
Oof. This is a pill that can be hard to swallow. In the early days, you start making money, the whole tax thing is new. Or, maybe you had your first big year, not as many expenses, and weren’t prepared for the amount of taxes. In either case, if you didn’t save enough to pay your taxes, that means it’s time to go back to the Bucket Method and manage your money differently in the coming year.
Making sure you have enough saved with every paid invoice will be a game changer, and that percentage can be easily calculated. Money does not have to be a guessing game for small businesses. Trust me, it’ll put your mind at ease to be in control of your money rather than it controlling you. Work with your CPA to find out how much you should put away from every invoice. Keep it in an account where you won’t be tempted to touch it (typically that 30% mark is pretty accurate and can be a good rule of thumb).
Plus, the possibility of giving yourself a bonus at the end of the year if you’ve not only saved enough, but maybe a little extra, should be all the incentive you need to start managing that tax fund!
The Wrap Up
Sounds simple enough, right? But how often do we find ourselves wanting to kick our past selves because we didn’t do these simple things? When I was a new business owner this is where I struggled the most. Switching from a W2 where your company takes care of all the nitty gritty details to then having to KNOW and MANAGE this stuff yourself, it’s daunting.
I’m sure the #1 follow up question to this will be “But Sarah, how do I find a good CPA?”. I’m not going to lie to you friend, it’s hard. Good CPAs who understand creative small businesses are like unicorns; very hard to find. My personal recommendation is to reach out to local creatives in your field and ask who they’d recommend. More than likely that person will then be local and already have a good idea of what you’ll need.
Good luck this season my friend, may the odds be ever in your favor.
