How to Sharpen Your Tax Axe

As the year winds down, most people start to slow down. People are looking forward to the holidays and start to bundle up as the days get shorter, maybe even start planning that holiday vacation. But if you’re a business owner, there’s something that starts to scare you even after Halloween has come and gone. TAXES!  

It’s that time business owners are planning (or dreading) their end-of-year duties. The worry deepens during the solstice and festers through the new year. March and April deadlines bear down on us like an oncoming train. 

Abraham Lincoln is quoted for having said, “If I had eight hours to chop down a tree, I’d spend six sharpening my ax.” Here are 4 activities that you can do to sharpen your ax before it’s time to chop down the tax tree.  

Clean Up Your Books

Of course, we recommend keeping accurate records year-round, but late is better than never. If getting into QuickBooks was on your 2021 New year’s Resolutions, you still have time to get it done. It needs to happen one way or another so there’s no time like the present. Waiting longer will only add to your stress as those tax deadlines approach. 

Go ahead and give your books a thorough updating now. If you are planning on using a bookkeeper to clean up the mess, make sure you engage them now before it’s too late and they won’t have time to take on your project. Most financial experts (Including My Small Business Pro) need to prioritize their current clients come January and only bring on a select few new clients, if any. You don’t think you’re the only one who waits until after the new year to think about your taxes, right? And if you have clean books, you can jumpstart the new year with important planning, budgeting, and strategic thinking.  

Collect W9s

When using contractors and outside service providers, it’s ideal to get their W9 tax form with their contract, but for long-term relationships or if you forgot, now is the time to update your records. Create a list of your contractors, consultants, and freelancers and send them the W9 form for completion. Just email will save you from panic and stress at the last minute.  

You only have until January 31st to send out your 1099s, so take one thing off your to-do list before the countdown begins on January 1st.  

Schedule time with your CPA

When tax time rolls around, you’re going to have a tough time getting their attention. Avoid being just another client and get the attention and focus you deserve. Pick up the phone now (or as soon as you’ve finished reading this!) and make your appointment with your CPA. This is the best way to make sure your ducks are in a row and you are taking advantage of any opportunities before the end of the year. As soon as the new year comes, you’re going to have to wait in line.  

If you are considering looking for a new CPA for 2022, make your choice now. Many CPAs will not take on new clients during their busy season. If you need a referral, we have a Rolodex of excellent CPAs to recommend.  

Make Sure to Run Payroll

How and when you pay yourself will have tax, business, and financial consequences that won’t be able to be adjusted once the new year starts. Forgetting to run your own payroll can have significant tax implications. 

If you take these simple steps now, you will start off the new year ahead of the game. Waiting on one or all of these easy-to-solve problems doesn’t serve you, and you may pay a hefty price whether it be time, money, or mental anguish that you and your business probably can’t afford.  Make sure that you’ve sharpened your ax so you can cut straight through to those tax deadlines with ease.  

Like most financial consultants, if you wait to reach out to me in the new year, it may be difficult to connect before February 1st. Be proactive and reach out to Daliah Fritz now, before the 2022 client list gets closed.