Whether you’re a freelancer, small business owner or solopreneur, there’s always a reason to celebrate once tax season is over. Forget whether or not you got a refund, the fact that you no longer have to deal with the consequences of self-induced procrastination is certainly reason enough to celebrate!
If you procrastinated during this tax season, you’re not alone. Earlier this year, the IRS had reported a slow start to the 2017 tax season. As of March 3rd, only 61 million Americans had filed their individual tax returns, down 8.5% from the prior year. Things have gotten a little better recently, with the IRS reporting last week that individual returns were down by only 3.6% compared to the prior year.
However, with just a week to go before the deadline, the IRS was still missing 4 million tax returns.
So why are Americans slower to file their taxes this year? The reasons are easy to speculate about, but hard to pin down. Some have offered explanations ranging from the conditions of the weather to the domestic political climate, but there doesn’t seem to be much science behind the guesswork.
At Billy, we take the issue of tax preparation very seriously. In our own experience, we’ve found that one of the biggest factors in expediting the tax process is having a system in place to capture, record and categorize important tax information throughout the year.
With that said, we think that the best ways to celebrate the end of tax season involve planting seeds to harvest during next year’s tax season. Investing in your own success is a surefire way to sail through tax season without the self-induced anxiety associated with taxes. Without further ado, here’s our list of the top 5 ways to celebrate the end of tax season.
1. Pat yourself on the back
It’s nothing short of an accomplishment to successfully navigate the complexity of the American tax system. With a tax code that’s over 80,000 pages long, you deserve some credit for making it through tax season successfully.
That brings us to our first way to celebrate: treating yourself to something you enjoy. Take a small trip to your favorite local getaway, or spend a night on the town with your friends. It doesn’t have to be extravagant, but it should be enough to help you remember why you’re in business for yourself. Just remember, you’ve earned it.
2. Assess your financial goals
The end of tax season is a great time to assess your financial goals as a freelancer. Why’s that? Because at some point in the tax preparation process you probably put together a profit and loss statement to calculate how much you earned.
Reviewing your financials while they’re fresh in your mind is a great way to assess whether you’re hitting your financial goals or falling short. Here are some common questions to ask when doing this review:
- Am I making as much as I had anticipated?
- Am I making enough to afford the lifestyle I want?
- Am I enjoying the work that I’m doing for the amount I’m making?
Answering these three questions at the end of tax season is a great way to give yourself a 30,000 foot view of your personal business and make sure it’s still working well for you.
3. Address your shortcomings
Alright, admittedly this doesn’t sound like it should be on any list of celebratory things anywhere. But it does address an important point in that you can’t improve what you don’t measure.
You probably encountered some problems or issues while preparing your taxes, so make sure to write those down while they’re fresh in your mind. Common problems include:
- Not having all of the required receipts for deductible expenses
- Finding out that something was deductible, but only if you documented it in a specific way
- Having a giant pile of unorganized receipts that made the process long and exhausting
All of these things and more are liable to happen in any given year. Make sure to take note of them and plan for how to avoid these mistakes and pitfalls in tax year 2017.
Once you’ve thoroughly taken stock of your business financials and reconciled them with your personal goals, you’re ready to build a plan for the new year.
4. Build an awesome plan for the new tax year
Now that you’re through tax year 2016, it’s time to build a plan to make sure tax year 2017 goes off without a hitch.
You’ll want to start by addressing your overall business goals. If you’re making an amount you’re comfortable with, able to afford your lifestyle and most importantly enjoying what you’re doing, you’re off to a great start!
If you fell short on any of these three goals or have some other things in mind that you’d like to improve, make sure to write them down.
I can’t emphasize enough how important it is to write down your goals if you really want to achieve them. Studies have shown that writing goals down can increase the odds of you achieving them by over 40%.
Once you’ve reiterated your commitment to past goals or formulated new goals, it’s important to create a list of things that will help you meet those goals. As an example, we’ll assume that one of your goals is to make more money next year.
One surefire way to make more money is to make sure you’re claiming every possible expense on your tax return. Every dollar that you aren’t paying in taxes is another dollar in your pocket.
A set of actionable steps to achieve this goal would look like this:
- Start receipts for expenses as they happen
- Take notes about business meetings for meal deductions, including who I met with, where we met, and what we discussed.
- Talk to my accountant to see if there are any other deductible expenses I can write off next year
Depending on the complexity of your goal, you may have a shorter or longer list. The thing to keep in mind though is that it’s not about the length of your list, but about how well you stick to it. That brings us to our final way to celebrate the end of tax season.
5. Commit to following your plan
Planning is great, except when plans don’t get followed. In order to stick to your plan, you need some way of holding yourself accountable.
This can come in many forms. Some people like having an accountability buddy to help them stay on track with their goals and plans. Others seek out specialized tools to help make their work more enjoyable, so doing accounting work doesn’t really feel like doing accounting work.
At Billy, we focus on simplifying the complexity associated with tracking expenses for freelancers. With a mobile app and browser extension designed to quickly capture expenses as they happen, you’ll never be searching for that darned receipt when it comes to tax time.
Since we know that it can be hard to stick to a new system, we offer a discount to new customers that sign up for an annual plan to help encourage long-term thinking to stick it out over the year.