With tax deadlines rearing their dreaded heads, Quote Roller helps you decide if it’s a good idea for you or your small business to do your own taxes.
“The only things certain in life are death and taxes.” What good ol’ Ben said 200 years ago looms true to this day. We push them off, we try to ignore them, maybe even bank on filing for an extension, but, sooner or later, we have to get our taxes filed.
The easiest thing is to take that shoebox of receipts down to the local tax guy. It saves you agonizing hours of stress, and, if there’s a mistake or an audit, most of the blame lies with him or her, not you or your company. But maybe you’re adventurous or, more likely, you’re looking to cut costs, and, thus, you are thinking of tackling them yourself. As you set out this year to do those dang taxes, Quote Roller is on your side.
We talked to Benito Armando Spital of the Costa Management financial business management service to see what somebody from the business says about doing your own taxes. “In my opinion it is a great advantage for an employer to hire a tax consultant who maintains the records and taxes,” he says, not surprisingly arguing in favor of hiring one of his own. He did offer four valid reasons as to why it can be better for your business to outsource this pain:
- You as the entrepreneur can devote 100 percent of your time to your business.
- The tax law is constantly changing. Being up-to-date requires a significant effort and to be highly specialized due to the highly-technical language used within the complicated tax law. In tax offices, “we receive all kinds of tax information so we can catch up daily.” (Armando is based in Spain, notorious for its especially impossible bureaucracy.)
- Fines for making a mistake or not filing taxes are very high. Some fines are much higher than what it would cost to hire a tax consultancy service for many years.
- The employer saves also the cost of purchasing and upgrading programs in accounting, tax, payroll, etc. These seemingly small costs are especially important to the self-employed.
Warning: While you have some legal security if you hire an accountant or lawyer, TurboTax isn’t going to represent you if something goes wrong.
Get a little creative! No, no, NO, not with numbers. But really think about your deductions. Already bought the update from Office 2010 to 2013? Deduct. Refurbished the waiting room? Deduct. Had to use your personal car for business and then had some repairs to make? Deduct at least part. That tax software or accountant you hire is deductible, too. But remember, these deductions can only happen with receipts.
The Difference between Expense Books & Tax Organizers: An Expense Log is just that — a list of your expenses — but that doesn’t mean the IRS, the HMRC or any other government agency cares. A tax organizer is updated every year, reflecting new tax law. It is literally a fill-in-the-blank journal of everything the tax bureau needs. They vary from basic organizers, to ones for the self-employed and renters, to those who want to itemize and write-off down to the last lunch out. These books are essential for anyone doing their own taxes or passing them onto an accountant.
And remember, tax law is always changing, so read the Updates link on your country’s webpage. One year, your company can get a huge deduction for installing energy-efficient light bulbs, the next, for holding a workplace diversity workshop. But these tricks can vary from year to year.
In the end, you need to decide if doing your own taxes is worth it to you. The American IRS estimated the average individual taxpayer took 22 hours to file their 2011 taxes. We can assume small businesses take longer. Especially when running your own company, time is money. If you have a complicated tax situation, that money you spend on the accountant could be less than what you get back because of him or her.
What do you think? Has any of our readers done their own taxes for their small business?