Female Entrepreneurs, Does Tax Season Terrify or Overwhelm You?
It’s time to reduce your stress… An interview with Deb Matz, tax planner and wealth advisor
Ugh! It’s that time of the year again when the IRS is knocking at the door, and you just don’t want to open it! Well, if you dislike tax season because it’s always stressful and full of surprises (and not the kind you want), it’s time to take a breath. I recently interviewed Deb Matz, the owner of DLJ Tax Services. As a successful wealth and tax advisor and female business owner, she has some valuable insights to share…
Deb, what is the number one thing you think female entrepreneurs need to be aware of when filing their taxes this year?
Be aware of what you don’t know. The tax code is complicated and there are several credits and deductions available to business owners. However, you need to know what credits and deductions are available in order to take advantage of them. You also don’t want to spend money to qualify for a credit or deduction if it doesn’t enhance the growth of your business. Spend your resources wisely and only on the things that help you accomplish your business goals.
For example, I know a business that was encouraged to purchase several new pieces of expensive equipment because they had profits at the end of the year. Heaven forbid they pay any taxes! That poor business sat on the equipment for almost two years. Towards the end of the second year, the equipment was no longer idle, but they had not reached the breakeven point on the expenditure. These dollars could have been used more wisely.
With all of the stimulus changes during the pandemic, business owners need to make certain they understand the documentation requirements to qualify for the credits and/or “forgiveness.” Plus, they need to be certain they do not use the same expenditures to double-up on credits.
What are the biggest mistakes you see entrepreneurs doing when it comes to preparing for their taxes?
The biggest mistake I see small business owners make is they don’t have a big-picture plan. They may have a personal financial plan that includes a short-term tax strategy, but they seldom include the long-term tax implications on their business or investments.
It’s important to recognize the impact that your business decisions have on your personal wealth. While you may go into great detail creating a business and operating plan, you may seldom think about the personal tax consequences those decisions will have and that can cause you to pay more in taxes.
Without a plan, you will have a hard time knowing if you should be strategically looking into certain tax credits or deductions. Just spending money to avoid paying taxes can be a costly mistake and a quick way to drive a business into the ground.
Also note that your plan needs to consider your desired exit strategy. Even if that may be several years away, now is the time to start planning for the tax implications. Having a working plan in place can also help you more easily identify new synergistic opportunities and even improve your chances of getting “top dollar” for your business.
What tips do you have for female business owners to help them improve the tax filing process each year?
Start planning for next year now. Sit down with a financial professional that knows business and understands taxes. Review your business objectives to see what credits or deductions would be best suited to enhance your 2021 business goals. Maybe you have been thinking about establishing, or contributing to, a retirement plan or adding to your staff? If so, there are a few different credits you might qualify for. There are energy credits, research and credits that move your business forward.
I feel that women need to build their financial confidence. Women are told too often that they are at a disadvantage when it comes to money and taxes. Don’t believe that! According to a study by MassMutual Financial, women own over one third of this country’s wealth. And when it comes to the tax code, it doesn’t care about gender, religion, political background, or race. The tax code treats everyone the same.
However, discrepancies exist. I think Judge Learned Hand summed up this reality best: “In America, there are two tax systems, one for the informed and one for the uninformed. Both are legal.” Being uninformed is what puts one at a disadvantage, so get informed!
Thanks for the great insights, Deb!
Hopefully, these insights will help make this tax season, and those in the future, a little less stressful!
Author Melanie Rembrandt is an award-winning writer, sought-after speaker and content strategy expert who helps entrepreneurs boost sales, awareness and credibility fast with a unique combination of targeted, SEO copywriting and public relations. For more information, tips and insights, visit Rembrandt Communications at https://www.rembrandtwrites.com.
Note that this is an opinion-interview article intended to convey general information only. If you need tax, financial or legal assistance, please see a professional advisor for more information.
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