As promised last week, it is now time to take a look at what you can do personally (or in your personal business) now that tax season is over.
The biggest thing to look at is if you should change your withholding. In general, if you are satisfied with that you paid or received at the end of your recent tax filing process (and your situation isn’t changing this year), then you can leave things as is. If the numbers at the end of the return were not to your liking, though, this is an easy way to start taking care of that.
Many people fill out a W-4 form when they start a job, and then don’t give it another thought until they begin a new job. Many people also fill it out by just using the small worksheet provided with it. This is fine for a number of people, but it does not give your full financial picture and therefore is not a guarantee to withhold enough from your paycheck to cover your annual tax obligation. If that is the case, you can have more withheld than the IRS calculates based on your filing status and allowances. Sure, this means you will take home less in your paycheck every week, but you may prefer those small changes over one larger payment come next April. If it is only a small extra amount that you are withholding, it can be easier to budget that out of your spending than you believe. (How many times a month are you getting a coffee?, Are you watching every streaming service you pay for?, etc.)
Budgeting is something that I want to highlight not only for personal finances, but for a business, as well. It is difficult to know exactly how your business is doing, after all, if you do not have a good hold on your expenses. This is something that I see every tax season as some small business owners are doing a year of bookkeeping in one fell swoop since that task was not a priority during the year.
And hey, most of those businesses were still operating, so it’s not like one can’t survive in this manner, but I would say that one can’t thrive. If you’re paying bills based on if there is money in the bank, well, at least those checks are clearing, but you can’t make positive changes if you don’t have the information you need to do so.
Maybe you feel you don’t have the time to do it. Or maybe you feel you don’t have the money to have someone else do it. I would wager, though, that that increased attention and timeliness will come with enough benefit to pay for the cost.
In summary, both of these ideas are really calls for attention. We don’t always like to see the answers to our financial questions, because the answers aren’t always positive (ooh, math joke). Hiding from it, though, does not magically make the answer better. Added attention gives you the information, time, and power to make an impactful change. Consider this a call to not let these things lapse until tax season – again.
And if these are steps that you don’t feel confident taking yourself, you don’t only have to pay attention to us during tax season either.
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