Ben Franklin gave timeless small business advice when he proclaimed that there were only two certainties in life: death and taxes. But you don't have to let your tax responsibilities drive you and your business to an early grave. Here are seven tips from a business mentoring expert on how to survive paying taxes.
"Death and Taxes." Ben Franklin gave timeless small business advice when he proclaimed that they are the only two things in life that are certain. But you don't have to let your tax responsibilities drive you and your business to an early grave.
As a business coach, the one problem I see many entrepreneurs running into is failing to budget enough money to set aside for their taxes. Then when it comes time to file their taxes, they don't have the cash. Unfortunately, not filing taxes is NOT the solution to the problem!
The following business mentoring tips are among some of the best pieces of bookkeeping business advice that I have shared with busy entrepreneurs over the years. If you come up short on cash at tax time, here are some things you can do:
Business Mentoring Tip #1: Gather your records and file all your tax forms immediately, even if you can't pay a cent.
Business Mentoring Tip #2: Write a letter and attach it to your forms explaining your financial situation. The IRS will work with you to find a payment option with which you can live. One of those options could be setting up a plan so that taxes can be paid in installments.
Business Mentoring Tip #3: Have a solid business plan that makes accommodations for both federal and state taxes, and stick to it. The last thing a new business needs is to lose its profits by paying penalties to the IRS.
Business Mentoring Tip #4: Open a second bank account like a tax savings account, to be used exclusively for saving money for paying taxes. As a business coach, I've seen many clients successfully use this strategy.
Business Mentoring Tip #5: Each time your write yourself a check or make a cash withdrawal from the ATM, take 20% of that money and deposit it into your tax savings account. For example, for every $100, set $20 aside for taxes. You will be pleasantly surprised how quickly your tax savings will add up!
Business Mentoring Tip #6: Each quarter, January 15th, April 15th, June 15th and September 15th make estimated tax payments to the Federal and State governments.
Business Mentoring Tip #7: Each October meet with your tax preparer for preliminary tax planning. You can evaluate where you are for the year and leave yourself ample time to reduce your tax liability or make additional payments.
By using this proven bookkeeping business advice and implementing these seven tips into your business's bookkeeping practices, you will be able to survive paying your taxes.
