Mention “taxes” or the “I.R.S.” and people dread hearing the subjects. No one enjoys paying taxes and some people avoid paying taxes altogether. But as the saying goes, “Two things are certain: death and taxes.” You can ignore them, but neither will go away. Many Entrepreneurs overlook paying taxes on a schedule during the year to wait for the deductions at the end of the year. But having to many deductions can hinder you in the long run. If you are struggling with paying taxes or just not sure how it is done, here two ways that can help:
1.Pay estimated quarterly taxes. Not waiting until the end of the year to pay is a great option. If you go ahead and take the money off top from the money you receive from clients to pay your estimated quarterly taxes, it can help lessen the blow of a huge lump sum due at the end of the year. They are due four times a year and can be paid online. https://www.irs.gov/payments/direct-payDon’t delay it, go ahead and pay if you can. You never know, you might even get a refund.
2.Put the money back. Save as much money as you can during the year to go toward your annual tax payment and don’t touch it. Even though it’s best to make the estimated quarterly tax payments, some people cannot and others just will not. Saving the money needed for the annual payment through the year relieves a lot of stress from you and your bank account. Put it an account that is not easily accessible and do not touch it until tax time. When it’s time to pay, you have most or all of the money needed to pay. It really will help lessen the blow, even if you still owe. Start today saving toward a stress free tax season.
Believe me when I say, the penalties and interest incurred from the I.R.S. as you go past deadlines trying to get the money to pay your taxes is not worth the stress nor the extra fees. It is better to start preparing now than being heartbroken with your accountant later. The best option is to start with estimated quarterly tax payments, however, saving toward your annual payment is a great alternative. Major I.R.S. debt will can stop you from getting loans, lines of credit, a home, or even possible investors that you need for your business. Let’s avoid those negative impacts and embrace better ways to pay the taxes owed. You got this!