This is a really good time of year to plan for taxes. When you have a plan it reduces stress, ensures compliance and can even make you money.
Like it or not, every small business owner needs a tax plan.
Not having a plan may mean you unintentionally spend collected tax dollars and then not have them when they are due to the government.
That is one EXPENSIVE mistake
When you pay taxes late you can occur both penalties and interest. If you wait too long the government may without warning, freeze your bank account.
It happens a LOT to good business owners that do not have a tax plan. This happens in big companies as well as small ones.
Why are there problems tracking and paying taxes?
- Small Business Owners are busy
- Cashflow is often tight.
- Tax calculations and forms can be confusing
- Rules and amounts change
- Business situations change
- Unrealistic payment and reporting schedules
- Too heavy of a tax burden
With everything you have going on paying taxes can be the last thing on your mind.
It is all not bad!
Having to pay corporate tax is a good problem to have; it means that you are making money and your company is profitable. Paying employer remittances means you have the good fortune of having at least one employee and paying sales tax means you made a sale.
Maybe it’s time to look at taxes differently?
Have you ever tried to reduce your tax burden by spending money on personal items through the company or bought things you don’t really need? Instead, save some of that profit you earned and just pay the tax. Your company value will be higher and will be contributing to important things like roads, schools and hospitals.
Earn profit and have a system in place to save the expected percentage to pay your taxes. Pay other government taxes like sales tax and income source deductions on time to avoid penalties and audits.
Now is the best time to book an appointment with your accountant to discuss your tax obligations for next year.
If you wait until the year is over, you may not be able to make changes like paying yourself a dividend, or making a strategic capital purchase. The feeling of missing this kind of tax advantage opportunity is not great.
One of the best systems you can put in place is having a separate bank account for the taxes you collect on behalf of the government.
It’s a solid system to have in place to keep you from “accidentally” spending tax money. The penalties are high for paying these late and governments have the authority to shut you down if you get too far in arrears.
So let’s not go there! Make a list of your tax obligations similar to this:
Review rules for each obligation listed above and put dates on your calendar to make sure you don’t miss an important deadline.
It’s the beginning of a tax system. You’ve got this.
Until next week, enjoy your entrepreneurial journey!