Most of us think about taxes in the spring and try to forget about them the rest of the year. After all, tax season isn’t the summer vacation season—while they both cost money, only one is fun.
However, tax season doesn’t actually start and end in April—it goes on throughout the year, especially if you work for yourself or you run a small business. Accepting that fact and changing your approach may be difficult, but here’s a new way to think about the tax season that may help.
Tax-Related Activities Are Year-Round
While you only do taxes in the spring, the activities that affect your tax obligations happen all year long. Money is constantly going in and out of your ledger, and you need to keep track of everything so you know where you stand financially at all times.
A lot of the same information that passes through your ledger affects your taxes. If, while you are tracking finances, you also keep tabs on taxes, you can stay on top of things throughout the year for better recordkeeping, more accurate quarterly tax payments and easier filing in the spring.
If you aren’t using an accounting system to track your finances already, you will want to make one a part of your everyday course of business.
Instead of tracking expenses by throwing receipts into a shoebox or keeping a spreadsheet, you can plug them into the accounting system. You can also use the accounting system to easily reconcile your books with your bank account statements every month.
By seeing your finances all in one place on a regular basis, you will be able to keep a closer watch on them. You will also provide yourself with a constant reminder to make sure everyone who handles transactions at your company communicates them regularly to keep your books current.
Taxes Are Financial Planning
Taxes aren’t just taxes, they are a part of your financial planning, and financial planning happens year-round. If you can change how you view and handle your company’s tax obligations, you will find some real benefits.
For one, you can take the emotional sting out of taxes by calling them by another name. This is a little thing, but it helps if you don’t get a sinking feeling in your stomach every time you think of tax season. Those kinds of feelings can make you avoid best practices.
For another, you can stay on top of your tax obligations in a way that lessons the amount of work you have to do every spring. For example, instead of going through a shoebox of receipts to compile a year’s worth of expenses, which no one wants to do, you will already have them in your accounting system.
Tax Season Is All Year Long
Tax season is the entire year, but that’s not necessarily a bad thing. In fact, changing the way you look at and approach taxes can have real benefits, both personally and financially.
By viewing taxes as part of your regular financial planning, you will take away their emotional and financial sting. You will also keep better records, more accurately estimate quarterly tax payments and lessen the time you spend filing in the spring.
If you have any questions about this or about getting some help with your taxes, we have accounting and tax experts waiting to speak with you. Give us a call anytime.