Tax Season Tips

Hi Jan. I can understand your pain! There is always an added burden at tax time. There are lots of reasons why people experience stress and anxiety during tax season: PTSD from a former audit, math anxiety, procrastination and avoidance of bookkeeping are just a few examples. In addition, looking back over your spending can force you to relive both good and bad experiences from the former year. Also, it can shine a light on frivolous spending as well as expenses that felt like they were extorted from you.

The best thing you can do for yourself is start with a plan for this year—now! It’s only February so you are not far behind on your bookkeeping at this point. Include bookkeeping in your schedule. It is so common for salon and mobile owners to forget to schedule time to take care of the business side of things. We are so busy taking care of pets and wrangling employees that we forget to take care of the business. A good start would be to give yourself one hour per week to work on your business. Just think; if you do this every week, come tax time, you will have already spent 52 hours keeping books and preparing for tax time!

Consider using bookkeeping software to help you manage your categorizations. I use Quicken and I love it! I have been using it for decades. It basically uploads all my spending from my various bank accounts and credit cards and automatically categorizes them based on whether the expenditure is tax deductible and if it is a business or personal expense. It is a single-entry accounting system that acts like a cash-flow monitor or bank register. It shows all money coming in and all money going out. I invest about one hour a week keeping everything up to date. At the end of the year, I send the final reports to my accountant and that is the extent of my time and hassle of getting ready for tax time. There are, of course, other bookkeeping software options. But the important part is not which one you use but that you actually use it.

Point of sale (POS) software could be another huge help when it comes to tax time. Some POS software works seamlessly with bookkeeping software. What POS software does for you is keep track of all your sales reports and payroll. Each time you check out a pet, the software keeps track of the income, charges the appropriate sales tax, manages the tips and keeps track of who gets paid for the service. In the case of hourly employees, it offers a time clock. When payday comes, I simply run a report that tells me the amount to pay each employee. Between these two software applications, I have streamlined my bookkeeping down to less than one hour per week and maybe three hours at tax time.

It’s true that getting these software applications installed and getting started using them can feel like a daunting task and it does take some time, but it is worth the investment! Look for a groomer on maternity leave, a high school student or a “temp” hired through an employment agency to do your initial data entry and to set up some of the systems.

If you don’t already have a good accountant that understands micro-business, find one! Micro-businesses usually operate with 10 people or less, and many grooming salons fall into this category. A good Certified Public Accountant (CPA) is worth their weight in gold. They will likely save you enough in taxes to pay for themselves. Many accountants have a checklist for you every year to help you gather the documents and calculations they need to figure how much you owe or receive in refund.

Keep your receipts! There are many ways to do this, and I would suggest using more than one. You can keep a paper folder with receipts, use an app to take pictures of receipts, scan and store receipts in a folder on your computer, have receipts emailed to you and save those in a folder in email, and many more. The most important thing is that you save them, not how you save them. If at some point in the future the Internal Revenue Service (IRS) wants proof of an expense, you will be so glad that you can put your hands on the proof easily.

If you find yourself in a real mess where you have not done anything all year—or worse—more than a year, hire help! Find out what it takes to get square. You may have to make some payments to the IRS, but you can get things moving in the right direction. It’s not too late! ✂️

 I am a multi-Best-In-Show and Best-All-Around groomer. I am the recipient of many Barkleigh Honors Awards. I am a Silver and Gold medalist for GroomTeam USA. I am the winner of Show Dog Groomer of the Year and I have been teaching as The Grooming Tutor since 2000. And I groom to make a living, just like you.   

Please send questions to [email protected]