After sleepless nights of filling out paperwork, staring red-eyed at Excel spreadsheets, wandering through your computer for financial statements and guzzling heart-palpitating quantities of caffeine, maybe you made the next tax deadline–April 15. Taxes are done, and you only have about 360 days before you go through that fire drill again, or less time if you have some mid-year quarterly or monthly filing obligations. Or, maybe you didn’t make it, you applied for your extension and now you’re just doing damage control.
Between monthly sales tax, quarterly estimates for federal income tax, corporate taxes and payroll taxes (just to name some of the more commonly known taxes), not to mention personal taxes, paying Uncle Sam the right amount at the right time with the right paperwork is simply brutal. It takes a heavy toll even on those who do this full time.
If you’re saying to yourself, “Next time I’ll start early,” but you happen to know you’re a procrastinator, I personally would doubt that voice in your head. Some people can go to the gym five days a week, clean their home weekly and pay their bills on time, but when it comes to taxes, they wait until they’re facing a battlefield of paperwork and a deadline just three days away. It’s not rational and explainable, but that’s what happens.
So here’s my advice to you: in 2014, procrastinate all you want about taxes without experiencing any penalties, stress or caffeine binges.
We Automate the Obvious – So Why Not Taxes?
Many of us find it odd that our parents manage their credit card bills with paper statements. There’s paperless billing and automatic payments, so why wouldn’t they pick an automated payment option that eliminates the need for memory, writing and mailing. The same goes for rent, electric bills, cable and internet—what you gain in peace of mind when you know you’re bills will automatically be paid is priceless.
So why with taxes have we resisted that trend of automation and outsourcing? Many of us rely on professional accountants, but the costs are high. Some of us rely on TurboTax for personal income taxes, but that still requires time, effort and not procrastinating—and it’s not particularly helpful if you have a small business and sell 100 products on Amazon and eBay. With digital shopping carts, credit card payments, debit payments, PayPal, inventory management and shipping from a warehouse in California to a costumer in Nevada when you work in Texas, your tax obligations are not straightforward. We have 21st century business issues with 20th century approaches to tax compliance.
Overcoming the Automation Inertia
The reality is that taxes are an ongoing drag on our stress capacity, memory, time and the money we need for better things. People get admins or virtual assistants so they can offload work that is important yet time-consuming and unenjoyable. But many of us have a hard time letting go of taxes, perhaps because we fear the tax agent knocking on the door in a few months thanks to someone else’s mistake. Funnily enough, doing the returns manually leads to more errors in preparing and filing the tax returns. Small and careless mistakes like calculation errors, inserting an incorrect tax ID or simply forgetting to sign the return all these lead to fines and penalties. The price we pay for these alone far exceeds the cost of using modern compliance technology.
25 years ago, no business would ever consider sending confidential salary information to a third party. Now, virtually every company outsources payroll compliance to companies like Intuit and ADP, because who really wants to process paychecks and calculate payroll taxes on each paycheck, or pay a person to do that?
Until five years ago, most businesses associated tax automation with large, Fortune 500 companies because the software came with a Fortune 500 price tag. Now, that’s not true at all. Outsourced solutions are affordable for a mom and pop shop, so the question is not can you automate taxes, but rather when will you do so? In ten years’ time? Why not reap the benefits of doing so in 2014?
Briefly, You Need to Not Procrastinate to Enjoy Procrastination
With automation, you only end up in trouble if you procrastinate about doing what it takes to be able to procrastinate (i.e. delay the automation process). You do need to do some base organizing before you can automate.
If, for example, you cram your sales tax data in a shoebox, you need to evolve. Whether you compile your sales data on Excel or use accounting software, data needs to be somewhere that software can reach it. Likewise with quarterly tax payments—to automate, you need your revenue, expenses, etc. in organized digital form. Then, you find the automation solution that makes sense for your business.
What is Procrastination Worth to You?
If the answer is a lot, then create a system for yourself that ensures tax compliance, saves you from frustrating calculations and cryptic paperwork, and monthly, quarterly and yearly fire drills that leave you frustrated, stressed and probably over-caffeinated.
If you sell online, just connect your shopping cart to an automated tax solution and then go right back to procrastinating. If you run a brick-and-mortar business, connect your accounting program like QuickBooks or Sage 50 to an automated tax solution.
Ultimately, think about what your time is worth, how long you spend on tax compliance and calculate what you really lose on taxes, including incidentals such as the cost of the mailing, bank fees as well as fines and penalties. Whatever the dollar value you associate with your time, if you just spent 20 hours sorting out your federal and state income taxes, Uncle Sam got his due and you lost the time that you could have spent on more productive activities on top of that. If you spent 15 hours scheduling meetings, booking flights or printing and stapling documents, I imagine you’d be furious. Start feeling the same way about taxes.
Here’s to stress-free tax procrastination in 2014!
Jonathan Barsade is the CEO of Exactor