Guest Post: Megan Schwan, CEO and Founder of Sidekick Accounting Services
Phew! It’s another year post-COVID and so much has been impacted! Most of our networks have expanded thanks to Zoom. If you’re still in business and thriving, chances are you “pivoted” by creating new streams of income or innovated what you were previously offering. Tax laws have changed and there are never-ending grumblings of more changes in the future, but your main focus is on operations, building your business to be successful and provide for your family. You don’t have the wherewithal to worry about tax implications or everyday accounting BUT that doesn’t mean it’s not important, even essential to reaching your goals. The good news is that I’ve compiled 5 tax and accounting considerations for you to keep in mind as you move and groove through 2022!
1. Be Proactive
This is a concept we push a lot here at Sidekick Accounting. I believe that a truly successful business is proactive about the future. What does that mean? It means thinking intentionally about what’s next. In the world of tax and finance this means considering things like budgets, projections, and forecasts. It means evaluating where you have been, so you know where to go. It means asking questions or partnering with experts to help you know what questions to ask so that you can continue to move forward in your goals.
2. Evaluate Your Tax Situation Frequently
Estimated taxes are required after the first year you owe (whether you have a business or not). The problem is that estimated tax payments are based off the previous year’s liability and do not account for what’s currently happening. In the world of small business this is a problem because our income can often ebb and flow. Taking a look at where you are financially throughout the year can tell you whether you should be planning for more tax liability or even less (but hopefully not because we want you to be growing not shrinking!) Remember to consider your business income as well as your personal income... (ie did you get retirement distributions, investment income, wages, spousal wages, etc)
3. Stop Using Cash Apps
I may get some slack on this one but let me clue you in on a more recent development. Legislation was changed December 2021 to allow the IRS to monitor your cash app accounts… (think CashApp, Venmo, Zelle, etc). This means that they are now able to take a look at activity and if you are not utilizing a business cash app account, they can alert those places who in turn can seize your funds if you are not using the accounts properly (thanks to their fine print). Also, their recording is subpar making it difficult to substantiate expenses. In my opinion and expert advice, I would say, don’t use them… it’s not worth getting your money seized or potential headaches later.
4. Refine Your Documentation and Reporting Systems
For both tax and accounting purposes, it is super important to have organized records. You are required to show proof of your expenses in the event of an audit and the burden of proof is on you, so having a separate-from-personal bank account and a receipt management tool can be really important for making sure you are covered. Throughout this year, start considering what you can do to refine documentation storage and how you are compiling your data. I would definitely recommend using tools like WaveApps or QuickBooks Online for your business finance needs.
5. Include the Experts
I know that there are many times as a business owner when you have to DIY. I get it! I started my business from the ground up with about $100 in disposable income. I did (or didn’t) do a lot on my own. However, when it comes to things like tax and accounting, legal structure/compliance, and insurance for your small business, you really do need to include an expert. Not only can we spot things you won’t see (until there is a problem), but we can also tailor the advice specifically to your business and situation. There is lots of information available, but every person, business and situation are unique. So do the research, listen to the podcast, watch the reel but then include your expert in on the conversation to get clarity for your specific situation.
There are many pieces to running a business and as it grows and expands there become more areas to consider and reflect on. These are just a few but if you can focus on even just one or two things in 2022, you and your business will be better off for it! I would love to hear which tip you are going to focus on first and what your goals are for the year. Feel free to shoot me a note so I can hear more firstname.lastname@example.org
I’m rooting for you and look forward to seeing your success in 2022 and beyond!
Megan Schwan is the CEO and Founder of Sidekick Accounting Services. As a single Mom to 4 beautiful children, she understands the necessity and benefit of running a profitable and successful company. Most businesses provide for families, both the owners and the employees. Her mission and passion is changing the statistic that 8 out 10 small businesses fail and empowering other owners to create the business of their dreams.
Megan is also a speaker, coach and published author. She pours into the small business communities providing education and support to starting and growing businesses. As your Accounting & Tax Sidekick, she and her team are here to help you understand, use and grow your numbers!
When she is not working to change the world of small business she enjoys exploring new places and experiences with her kids!"