3 Reason Why Small Businesses Should Embrace Summer for Stress-Free Taxes
If you find yourself feeling anxious or stressed around tax time, you’re certainly not alone. 80% of American small business owners feel at least some stress at tax time, according to a recent survey by FreshBooks. Almost 63% of owners rate their tax time stress at 3 or more on a scale of 5.
Overall, taxes can be a real killjoy for small business owners, with many saying they’d rather do a number of unpleasant things than deal with them. 60% of the survey’s respondents chose one or more of the following over doing taxes: hanging out with their mother-in-law for a day, getting a mullet haircut, getting a root canal, removing a nest of angry bees, or shockingly, licking a pole on the subway.
What’s driving the anxiety and stress? A lot of it comes down to a lack of organization and preparation. The FreshBooks survey found that 43% of American small business owners procrastinate when it comes to tax preparation, with the majority saying they don’t have enough time, and/or they don’t understand what they can do to be better prepared to file. Some of the stress comes from unease around tax assessments, with 43% of owners saying they’re worried about being audited.
“If you’d rather handle angry bees or risk getting sick by licking a subway pole than do your taxes, it’s time to look for solutions,” says Michael Ly, Founder & CEO of Reconciled, and FreshBooks Partner and member, FreshPAC (FreshBooks Partner Advisory Council). “Yes, taxes are a pain, but that pain can definitely be soothed by using the right tools and resources.”
FreshBooks also discovered there are a lot of things small business owners would rather do than stay on top of daily accounting. One third of American owners rate ‘everyday accounting tasks’ at or near the top of a list of things they avoid doing at work including; cold calling, scolding an employee or dealing with a terrible customer.
Easing Tax Time Pain
Even though many stressed out owners don’t fully understand how to get ready for tax time, only 32% of small business owners said they plan to work with a tax professional this year. Additionally, over 70% said they are not using modern accounting software to help manage their businesses finances.
“There’s really no need to be pulling your hair out over tax time,” says Derek Daisy, a voice actor/singer-songwriter and FreshBooks customer in Charleston, South Carolina. “Using accounting software makes doing taxes a breeze, especially because of the expense reports and profit and loss statements you can access at the end of the year.”
What else can American small business owners do to feel less stress at tax time? FreshBooks analyzed the behaviors of small business owners that correspond to less tax time stress and found these top 5 tips:
- Set aside time to work on your taxes,
- Set aside or secure enough funds to cover your tax liabilities,
- Create and implement a tax plan or strategy, ideally with an accounting professional who can help you make the best decisions for your business all year,
- Brush up on the latest changes to the tax code,
- Keep your personal and business finances separate.
FreshBooks also has a number of resources to help small business owners get organized for tax time and reduce their accounting and tax time stress.