Your friends may be getting starry-eyed, opining about the myriad ways they may spend or invest their tax return, but if you're like many small-business owners, you've just penned a fat check to Uncle Sam. Chances are tax season has left you feeling stressed and maybe even a little grouchy when you listlessly look at your checking account balance.
On the bright side, you're still your own boss. Sure, your friends may be planning a vacation, but you're planning world domination. Who has the better deal?
And even though doing your taxes may have tested your mettle, that doesn't mean every April has to bring you to the edge of your sanity. Here are some pointers that can make next year's annual taxes a little more bearable.
Tax Tips for a Stress-Free April 2016
Two things in this life are unavoidable: death and taxes. Fortunately, you have some measure of control over the latter. To save some money on your tax bill and to make filing easier, consider the following:
- Get help. If you didn't work with an accountant this year, make sure that's your top priority going forward. An accountant knows the ins and outs of the tax code and can help you take advantage of deductions you may not realize you can take. Need help finding a local tax expert? Search the National Association of Enrolled Agent's directory.
- Plan ahead. You only set yourself up for panic if you procrastinate too much. With taxes, you especially don't want to be caught off guard. For a crash course in your tax obligations, read the post "Did You Freelance This Year? Now Is the Time to Focus on Small Business Taxes."
- Contribute money to a traditional IRA. The money you contribute to your IRA is a pre-tax contribution. That means you have less taxable income at the end of the year.
- Set up reminders to pay your quarterly taxes. Write all the checks (to state, federal, and city tax revenue agencies) with the corresponding tax stubs, put them in the properly addressed envelopes, stamp the envelopes, and put them in a specific place so it's hard to miss deadlines.
- Give back. This tip has a twofold appeal: charitable contributions can help reduce your tax burden and help your business get its name in front of the community while it helps others. Truly a win-win situation. Keep in mind that in order for these deductions to apply, your total tax deductions must exceed the standard deduction.
- Get organized. Most tax anxiety stems from the notion that the process is pure chaos, a whirling storm of saggy receipts, misplaced tax documents, and impenetrable tax code gibberish. Cut through the stress by creating an organized system for next year. (Your accountant will thank you!) Keep a physical or digital folder (e.g., an email or Dropbox folder) for business purchases and expenses you plan to deduct, 1099 forms, loan interest statements, mortgage statements, and last year's tax return. If you do keep a physical system, be sure to put it somewhere safe and handy.
For more tax tips, read "Tax Prep: 5 Ways to Be Prepared for Tax Time."