Here’s How Small Business Owners Can Beat the Stress of EOM Business Tax
Wrapping up your books at the end of the month can be a stressful time for any small business owner, especially when it comes to weighing your tax obligations. We’re breaking end-of-month business taxes down — and making it easy.
You’ve been putting in the hours, catering to your customers’ needs, and balancing business with at least some sort of personal life. As if the juggling act of a small business owner wasn’t already hard enough, the end of the month (EOM) arrives before you know it, and BAM! — it’s time to close your books!
Whether you’re busy sorting through inventory or calculating your estimated tax, the end of the month can be a stressful time for any business to manage, especially when weighing your tax obligations.
We get it — wrapping up the month can feel super overwhelming. But don’t fret. We’re here to help you break down your tax responsibilities and make monthly taxes easy to tackle in just 5 simple steps.
Set up your end-of-month plan
First thing’s first — make sure you have an end-of-month plan in place. An end-of-month tax plan allows you to identify all of your tax obligations for the month and should include all of the steps needed to ensure your payments are in order.
This can help you avoid paying any tax penalties that could crop up later on down the line. It can get overwhelming pretty quickly without one and waiting until the last minute can cause dire consequences that may result in penalties and interest if the information you have to report is not accurate.
Your plan could be as simple as a written checklist or reminders scribbled in your, or kept in a spreadsheet for more sophisticated tracking. Whatever system you choose, the key is to keep these tax obligations solidly on your radar.
Get familiar with your tax & accounting software
Before closing your books for the month, it’s important to know how your accounting, bookkeeping, and/or point of sale (POS) system works. We want you to know how to get to what you need when you need it.
Knowing your software is important because as the business owner you need to know what information is held inside each platform, and where to find that information if you need it. Every business professional has had that “uh-oh” moment after downloading a new software program. While these tools enable small businesses to run their operations more smoothly, they are only as effective as they are understood.
Before you find yourself staring at a screen saying “Huh?” to yourself, it is important to take the time to get familiar with your accounting, bookkeeping, or sales systems. Understand what information can be collected and stored inside each platform, and how to pull the data to provide insights into other areas of your business.
For example, if you are a restaurant that uses Toast’s Point-of-Sale system, you should know how to find the amount of sales taxes you’ll owe for this month.
Verify your books are up-to-date
Running a business can feel like a whirlwind — sometimes it’s even hard to keep track of what day it is so it can be easy to lose sight of your tax obligations!
One of the most important things you can do to help make doing your business taxes easier is to keep clean, clear, and up-to-date accounting records. (i.e. your “books.”)
Ideally, all the transactions that have taken place in your business over the last month should be correctly entered and categorized into your books. If something is missing, that could cause issues for you when the time comes for an audit. If you notice something missing, make sure to add the missing information to your books before you start your end-of-month process.
Pro Tip: Set aside an hour each week to review your books. This will help make verifying your books a breeze!
Reconciliation, Reconciliation, Reconciliation
Reconciliation is huge — it means matching all your income and expenses in your books to your business bank account. Unfortunately, this step is often forgotten in the flurry of other small business owner tasks, but you can’t close out your books at the end of the month without making sure everything is reconciled, so it’s a must.
Bookkeeping tools like Quickbooks or Xero have a function called “Reconciliation” to help walk you through reconciling your accounts at the end of each month.
Track your tax obligations
Below is a list of tax obligations that your business may owe at the end of the month. Make sure you check with your states to get your business's specific tax requirements.
- Federal and State Estimate Taxes
- Self Employment Taxes
- Sales, Use, and Excise Taxes
- Unemployment Taxes
Our database of Sales Tax Resources by State can help you determine what business taxes you might owe.
Set your small business up for success
As entrepreneurs, we often want to do everything ourselves, but business tax isn’t something you should go at alone. In fact, accounting errors, late tax filings, and more leave business owners shelling out millions of dollars in tax penalties each year.