Fear and Taxes: How therapists can overcome their fear of taxes.
Being afraid of taxes as a small business owner is quite common, especially considering the complexities and potential consequences of making mistakes. However, therapists tend to be extra when in comes to anything finance therefore the tax fear factor is exponential (as my dear friend Mari Mars would say “I say this with love”). Much like Inference Based CBT, we need to get in there and challenge our own obsessional doubt. Here are a few strategies that have helped me to become less fearful and more confident in handling your taxes:
Education and Understanding:
Take the time to educate yourself about the tax requirements for small businesses. Understand which taxes you are responsible for, such as income tax, self-employment tax, sales tax (if applicable), and any other local taxes. There is a fantastic facebook group and website https://www.simpleprofit.com/blog. The owner is a CPA and a LMFT.
Seek Professional Help:
Of course its ok to find a qualified accountant or tax professional who specializes in small business taxes. But don’t just hand it off, you need to be included in the process. One of the most important things I learned while I was Director of Social Services was from a psychiatrist who stated “No one will look after your money like you will.”They can help you understand your tax obligations, identify deductions and credits, and ensure that you file accurately and on time, but they won’t ever look after your money like you and you need to be involved. The same provider above has a list of recommended CPAs in the FB group.
Stay Organized:
Maintain detailed records of your income, expenses, invoices, receipts, and any other relevant financial documents throughout the year. Organizing your financial information will make tax preparation much easier and less stressful. For receipt keeping of expenses, I love using an app called Genius Scan on my phone to capture a photo and convert to pdf, send the pdf to my google drive for an additional storage site, then toss the paper so I don’t have to keep track of that.
Use Accounting Software:
Invest in accounting software or online platforms that can streamline your bookkeeping and tax preparation processes. These tools can help you track your finances, generate reports, and even file your taxes electronically. Many professionals will request you use a certain software so defer to that(usually Quickbooks but I personally hate all Intuit products). A lot of therapists who do their own like the free Wave software. I have trouble with that-I’m picky, it’s not intuitive to me. I’m currently trying Quicken but my favorite has been google sheets, it just doesn’t import your transactions. I also like TaxSlayer for taxes.
Plan and Budget:
Set aside money throughout the year to cover your tax liabilities. Estimate your tax obligations and budget accordingly so that you are not caught off guard when it's time to pay taxes. I take taxes into account in my annual planning tracker which helps you not only plan your year but also helps you set your rate. A general rule of thumb is to save 30% for taxes.
Take Advantage of Deductions and Credits:
Familiarize yourself with the tax deductions and credits available to small businesses. These can include deductions for business expenses, equipment purchases, home office expenses, and healthcare costs. By maximizing your deductions and credits, you can reduce your taxable income and potentially lower your tax bill.
Stay Compliant:
Keep up to date with changes in tax laws and regulations that may affect your business. Failure to comply with tax laws can result in penalties, fines, and even legal consequences. Consider attending tax workshops, webinars, or consulting with your tax advisor to stay informed. But also, don’t freak out if you make a mistake. The IRS isn’t out to get anyone (don’t get me wrong-I’m still scared of them), but they want to get things corrected. I couldn’t afford my estimated taxes last year, for a small fee I was able to create a payment plan for the remainder. Another good resource is the podcast Therapy for your Money by Julie Herres of Green Oak Accounting and author of the book Profit First for Therapists.
Stay Positive and Proactive:
Instead of fearing taxes, view them as a necessary aspect of running a business. By staying proactive and addressing your tax obligations promptly, you can avoid unnecessary stress and focus on growing your business. If you need some compassionate accountability, join me and others for a Tax Prep Coworking Time in March.
Remember
It's normal to feel apprehensive about taxes, especially as a small business owner. However, by taking proactive steps to educate yourself, seek professional assistance when needed, and stay organized, you can alleviate much of the fear and uncertainty surrounding taxes.
