Your taxes only end up stinking if you put them off till the last minute.
You are trying to back away from them but their stank is just ridic? They have no idea how bad their breath is! Especially when they eat the onion bagel with lox cream cheese! You’ll do anything to avoid their halitosis.
Got me thinking. Do your taxes have bad breath? Your taxes only end up stinking if you put them off till the last minute. It stinks to have no idea how much money you owe the IRS. Give your taxes a breath mint! No more scrambling the last few days before taxes are due. No more tax surprises. No more bad breath.
How you plan your taxes is most likely how you plan your financial life. It’s time to be proactive, not reactive! I want your financial life to be easier for you.
Here’s my step by step plan on how to stay on top of your taxes.
1. Keep your books/financial records current. Hire a bookkeeper. You didn’t get into business to enter all of your receipts/bills into Quickbooks by yourself. This should not be your day job. No more 10pm data entry after your kids go to bed. Why not watch Homeland instead?
2. You need to speak with your accountant every quarter (better than getting a root canal, right?). Give them your quarterly profit/loss statement. Review it with them. Ask your CPA to tell you what you owe in taxes for that quarter. Then when you get the amount owed, pay the taxes then. Don’t wait till the end of the year. You will forget. You might spend your tax money somewhere else and then it’s game over. If you do this every quarter, you will most likely have paid in enough in taxes and you wont get hit with a huge bill.
3. Ask your CPA how you are going to pay your taxes. Will it be through withholding from a salary, or just based on paying estimated taxes?
4. Make sure you have the correct entity for your business. Should you be a sole proprietor, LLC, or an S Corp? Ask your CPA if you need to take a salary to pay your taxes. Most of the time, S Corps and C Corps have to pay salaries to you.
5. If you have sizeable realized gains in your investment portfolio, tell your CPA. A realized gain is when you buy something (stocks/mutual funds, etc) and sell it for a profit, in a taxable account.
Why do all of this tax planning stuff? Because now we can have a clearer idea how much money we have left. Our money is dying to talk with us! It’s so much easier to have a conversation with it when we know what we have – once we pay taxes. It’s time for us to get peace of mind, happiness, and more financial control. We just have to make the decision that doing tax planning isn’t that bad after all.