How Unprepared Are Small Businesses for Tax Season? These Stats May Blow Your Mind.

I recently hired someone to help me manage my finances. Accounts payable and receivable, business expenses, bank accounts, tax information – it just became too much for me to handle myself. Yes, it was difficult to give someone else access to this information, but everything is much more organized and efficient now.

And after reading about this survey, I’m so glad I took that leap of faith.

In a survey of 600 small business owners, GoDaddy found that the majority of small businesses are still tracking finances the old-fashioned way – using a basic spreadsheet or handwriting information into a notebook. I really don’t have a problem with this as long as you have a system that works for you.

Here are the findings from the study that blew my mind…

Nearly one quarter of small business owners admit to not knowing if a client paid them, or they could see this happening.

Let me get this straight. You close a sale and provide the product or service that enables your business to exist, but you can’t keep track of whether or not you’ve been paid? And if you could see this as a potential problem, how do you not fix it?

Nearly one third of small business owners don’t set aside money for income tax purposes.

I’m no accountant, but I don’t think you need an accounting degree to realize this is a risky proposition. If you don’t set aside money for tax time and then realize that you don’t have enough money to pay your taxes, what exactly do you do? Beg for forgiveness?

Nearly three-quarters say they can “ballpark” what they owe, and 12 percent have no clue. Only 15 percent know exactly how much they owe.

I can understand being a little unsure about your tax obligations during your first year of owning a small business. Maybe two years. But after that, you should be able to estimate more closely than being in the ballpark. How can you set an operational budget if you don’t know with any degree of certainty how much you need to pay for taxes?

This problem speaks to a bigger picture problem for most small businesses.

Yes, we as small business owners wear too many hats. But if you’re unable or unwilling to properly manage your company’s finances and tax information, you need to be willing to delegate the responsibility.

This is the kind of stuff that can’t be pushed to the back-burner. It could mean the life or death of your business, or at the very least, a time-consuming and stressful audit from your friends at the IRS.

I mentioned that I’ve delegated the management of my finances. I’ve also delegated website maintenance, blog posting and distribution, and many of the errands and tasks that Time Well Spent handles for our customers.

I can’t do everything myself. I have no desire to do everything myself. Neither should you, because your business will only suffer. And your head might just explode.

Honestly, my business is running more smoothly than ever, and I haven’t sacrificed revenue. Why? Because I learned to delegate and quickly realized how much more I could accomplish as a result.

If there are tasks and errands that you’d consider delegating so you can run your business more effectively, give us a call at Time Well Spent. If we can’t help you directly, we can refer you to professionals who we trust.

And remember, April 15 is quickly approaching. Please don’t let your business suffer due to a lack of preparation and organization!