The one thing I absolutely struggle with as a small business owner is paying taxes. Yes, I’ve worked with a professional accountant (who is fabulous) and yes I have those little reminders set up. But still, come quarterly tax time, even if I somehow get some extra income and can set it aside, life happens, and there are other ways that money needs to be spent. Or, I’ll put it off, saying “oh yeah, quarterly taxes, I’ll get to that right away….” and then it falls off my radar, buried under other items crowding my to do list. I rarely remember to put away a percentage of my income for taxes. This is the one thing that came easier with a full time job, where it happened automatically behind the scenes and you didn’t feel it as much.
I mean well, but as a small business owner, I’m juggling many tasks at once. Every now and then something slips through that I should’ve been paying more attention to. That is, until I was doing a scenic drive with a fellow business owner, and together we discussed a life hack for business owners and taxes.
I have a Capital One online bank account (it used to be ING Direct). This account has a couple different things in there, such as a little vacation fund and some rainy day money. But honestly, beyond that, it’s underused, because I also have a business checking account with my local bank. One of the features in particular that I love about the Capital One online account is that it allows you to create additional savings and checking accounts on your own. Say what? A new account without all the paperwork? Yes.
So, I created an account for State Taxes and Federal Taxes. I looked at what I paid in taxes the year before for each, and then I broke that number down by 52 (weeks). Then, I set up an automatic weekly withdrawal from my local bank accounts, into these preset Capital One accounts. Now, do I feel this constraint a little with my income? Oh yes, but…. I feel it a whole lot less now that I am less involved in the process.
I recently logged into my Capital One account and it felt so good to see the funds already set aside for Q1 this year. It felt good to know that I won’t have to worry about scrounging funds together when the deadline hits, because the funds will already be waiting for me. Check it out at Capital One, or see if this is a service your bank already offers.
As a business owner, the more that I can automate, so that I don’t have to worry about it so much, the better.
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