If the idea of filing small biz taxes makes you break out in hives, cold sweats or gives you the desire to rock in the corner, you are not alone. Let’s be honest, attempting to actually stay on top of taxes isn’t fun for most people, especially not creatives. We would rather be making stuff and helping people than filing paperwork! But it’s a necessary evil and, as 2015 is rapidly winding down, we have found ourselves starting to think about how to set our business up for success in the new year.
Enter Amy Northard: a small business CPA who specializes in creative businesses. If you ask Amy why she works exclusively with photographers, designers and makers, she will tell you that she couldn’t imagine her life in a cubical. Yes, she is great with numbers and has that attention to detail thing you would totally need from a CPA that you can trust. But she wanted to create a life and business that was colorful, one in which she could impact the numbers by serving creative-preneurs. As a result she has built a full service consultancy and recently released her very first eCourse Be Your Own CFO.
We asked Amy:
If we could do 3 things to set ourselves up for success in small biz taxes the new year, what would they be?
This is a super busy time of year for everyone. Whether you’re busy spending time with family over the holidays, or working hard to get orders out the door. I’m sharing three simple things you can do right now (yes, amidst the hustle and bustle) to make 2016 super successful when it comes to your business finances.
Make bookkeeping “business meetings” with yourself for every month of 2016.
Choose a date for each month and create an appointment for yourself. Treat this like a client meeting. You wouldn’t cancel last minute on a client or keep pushing the meeting back. When the meeting time arrives, go to your office or a coffee shop and get your bookkeeping done for the month.
By scheduling the bookkeeping meetings before the year starts, you’ll be mentally prepared to set aside the time needed. After a couple months, it becomes old habit and just another thing on your to-do list. If you keep pushing your bookkeeping to the bottom of your list, it will snowball and feel unmanageable.
Set up monthly receipt folders for your small biz taxes (digital and physical).
I don’t know about you, but when I get home from a business lunch meeting, that meal receipt has a 50/50 chance of getting lost in the depths of my purse or making it up to my office. To increase my odds of rescuing receipts from my purse, I labeled 12 envelopes with the months. I keep the current month’s envelope nearby: in my purse or in my kitchen so it’s a no-brainer when I get home and have receipts to file.
For digital receipts you can set up folders in your email where you can save receipts as soon as they hit your inbox. Since the IRS accepts digital or paper receipts, don’t feel like you have to print out every emailed receipt.
Every month, when you have your bookkeeping date, make sure you export your emailed receipts to PDF format and save in a secondary location. I’ve heard horror stories of emails being hacked or history being deleted and then losing all of that important documentation. While it’s an extra step to save your documents in another location, it will give you peace of mind.
Create a separate savings account to save for taxes.
The key is “out of sight, out of mind.” By creating a completely separate account from your day-to-day business operations account and transferring a portion of your profit to this account, you’ll be less likely to spend the money that you’ll need to pay for your taxes.
This concept can be used for sales tax that you collect from customers as well as setting aside money for income taxes.
Setting up the account is simple. Go to your current bank and let them know you want a business savings account. Make sure the account has a limit on transfers out so that you aren’t tempted to take money out for personal use, only for tax payments.
This will set you up for success when it comes to saving for taxes and help ensure you never have to feel that awful feeling of not having enough cash when it comes time to pay your taxes.