Tired of tax stress? Ready to make the filing process less stressful?
- Set up separate savings account for tax payments
- Leverage apps like Digit or Acorns to automate saving
- Make quarterly tax payments versus one lump sum
- Hire a bookkeeper to keep things organized (I use Bench).
Nobody likes scrambling to organize expenses and putting together monies owed every April. So, if you’re working for yourself, or you have plans on working for yourself, read on.
This system is a surefire way to avoid the misery often a part of the tax filing process.
1. Setup a Separate Savings Account
This is one of the simplest steps you can take to make sure your tax money is set aside and safe.
By opening up a separate tax account. It’s a good idea to always have a personal account and a business account, but the one step that seems to get lost on most business owners is then having a separate count strictly for taxes.
Having one account for everything may seem like an easier idea, but your tax money, your income, your expenses, everything all bundled together can lead to overlap and disorganization. I recommend you visit CIT Bank, as they have a high-interest online account that you can use to keep things completely separate.
All while earning interest on the tax money you set aside annually.
Benjamin Franklin said life consists of “death and taxes” but he didn’t say tax stress. A separate account like this is a great way to minimize that (or outright stop it).
Note: learn more about this account by reading out CIT Bank review.
2. Use Apps To Automate Saving
Here’s the next step. You’re going to want to do, set up a process to automate taxes and a great way to do this is by leveraging applications. Digit and Acorns are my two favorite applications for this.
Both are virtually free to use ($1–$3 per month, max) and will allow you to 100% automate the tax-saving process. All you’ll have to do is configure the settings so it auto-deducts from your accounts. That’s it.
How’s that for minimizing tax stress?
Once you set these up, they will automatically withdraw small amounts of money at increments you set. You can also make manual transfers to that separate savings account.
Note: Acorns is a great way to save on auto-pilot for anything, as per our guide on how to get out of debt.
3. Make Quarterly Tax Payments
The third step here: don’t skip quarterly tax payments. It’s better to break tax payments up into smaller, more digestible bite-sized chunks. That way you stay ahead of any penalties and internet, and ultimately, pay less in the end.
Plus, if you pay your taxes quarterly–versus paying once annually–you’ll avoid sticker shock (a.k.a. tax stress). So, if you want to avoid that, pay quarterly instead.
That’s another benefit. But third, and perhaps most importantly for entrepreneurs, it will help you get a clearer picture of your cash flow situation.
4. Hire a Bookkeeper
A bookkeeper can change the way you run your business–saving you time, money, and resources. Because keeping expenses organized is one of the biggest predictors of tax stress. And you can bypass much of that stress by hiring a bookkeeper.
If you don’t know, bookkeepers can change the trajectory of your business and your personal life. They do this by freeing up time and energy to grow your business, versus burning that time on managing it.
- Help prepare your taxes and financial reports for a CPA
- Categorize all of your business and personal expenses
- Check your receipts and verify credit card statements
- Handle payroll, annual and/or quarterly tax payments
- Setup budget, balance sheet, profit, and loss statements