Yesterday was tax day. Is this the opposite of Christmas in July? Especially when it is a combined Q1 & Q2?
I’m not a tax expert (deliberately, so that I never give half baked advice), but I am an expert on handling expenses in a pre-planned prudent way.
I know how to make tax day not only painless, but (maybe) even joyful. Here is what I recommend:
Step 1: Open a separate account to save for taxes. This should be an account that is fairly difficult to even access. Maybe at a different bank than you use for everything else, and maybe it doesn’t have fantastic online banking options.
Step 2: Every time you take a draw from the business, put the equivalent of your effective tax rate in this account.
Step 3: Get a good TAX CPA. This means a CPA that doesn’t only file your taxes, but plans for them throughout the year.
Step 4: On tax day (or a week before), write the check for your quarterly taxes out of this tax account.
Step 5: Go out to dinner to celebrate that your good tax CPA saved you so much that you have lots of extra in your tax account that you can move over to your personal account.
This is how you run a business without losing your mind. This was never your money anyway. You can’t lose what you never had.