Taxes in February?! You bet.
For most people, tax season isn’t something to get too excited about. Many postpone doing their taxes for as long as they can, and when it comes to getting everything organized and ready... they don’t.
But here’s something I want you to remember … there’s an upside to taxes! Taxes help make the world go round. They pay for roads, schools, social security, Medicare, unemployment benefits, national defense, public offices - stuff we all use and need.
Like with anything in life - fully embracing the process will empower you. Resistance will do the opposite.
So how can you approach paying your taxes with ease (and love)?
Here are 4 steps:
1. Set Yourself Up for Success.
Get organized and keep track of your expenses all year – especially if you’re a business owner.
With a 6-7 figure business, it’s important to delegate the financial aspects of your business to someone you trust (i.e. your CPA). I use Maddie Brown at Smashing Numbers. Her team manages my client payments and all of my business expenses including my independent contractors. This past month they issued all of the 1099s by the January 31st deadline for 2018 and now are preparing my 2018 tax returns.
If you haven’t hired a bookkeeper or CPA to work with you throughout the year then my recommendation is to keep track of all your expenses and income in a spreadsheet. Update it every month so that when taxes come along, there’s no extra work or stress getting things together. You can simply email it to your accountant and they can take it from there to file your taxes.
I also recommend keeping a folder just for tax information. A lot of things are electronic now, but you may still get paper 1099s or W-2s and you don’t want to lose them. And if you’re a business owner, use one credit card for ALL your business expenses – it will make things much easier to track.
2. Don’t Procrastinate.
It’s easy to drag your feet and put off doing your taxes until the last minute, but it doesn’t help you (or your accountant).
Get clear on what you need to provide every year - and keep track of those things on a monthly basis, as mentioned in step one. This will help if you’re afraid of forgetting to include something that may be important - whether it's an income or expense.
Then schedule a time in January or February to get your taxes done. There’s no reason to wait if you’ve gathered all the information you’ll need. Get it on the calendar!
3. Treat the IRS like a Friend, not an Enemy.
If you’ve ever had to call the IRS, you know that it can take a while to get through. Instead of getting upset, know that when you do get an agent on the phone, they’re genuinely going to help you.
These agents are some of the nicest people - they’re funny, generous, and will take care of you. Plus, they’re going to answer your questions and make things easier and clearer for you going forward.
Don’t see them as the enemy or an obstacle you need to overcome – see them as a friend. They’re there to help you, after all. And even though people hate them, remember, they show up day after day to be of service.
Thanks, humans of the IRS, for keeping the government running! Despite our collective best efforts to sabotage it all.
4. Embrace Owing on Your Taxes.
If you’re a business owner, the number you owe may scare you. Embrace it. Realize that with more income comes more expense. And think about what that new number demonstrates – success!
Last year, I had a 6 figure tax bill. All told, State and Federal added up to about $150k. It was the biggest all-in-one payment I’d ever made, and I know that this year I’m going to owe more - and that’s okay!
One of the things that's so striking to me about the experience of increasing our income is that the inside experience doesn't change as much as the numbers. The numbers get bigger - and it can be easy to get caught off guard.
To read more about my 2017 tax experience, click here.
What’s your tax story? What would it look like for you to experience tax season differently? What’s one step you’re going to try taking this year? I’d love to hear from you in the comments!