Tax day is nearly upon us — April 18 in the US, and as business owners, we just LOVE writing those checks. Um… not likely the case. 

How did taxes go for you this year?

Did you itemize enough? 

Did you put money aside? 

Did you have to borrow to pay your tax bill? 

Can you file an extension? 

Wait… what’s a tax extension?

Well, hold on and buckle up. Let’s end this cycle once and for all so next year is smooth sailing. 

First, let’s chat about extensions and how they can help your business. A quick side note; if you were in an area that experienced a natural disaster, such as a hurricane (hello Florida, flooding-Northern California, or Tornados in the Midwest or South), check with your tax advisor as you may get an extension to file due to the event. A lot of peeps don’t know this, so always check, especially since natural disasters aren’t new.

The purpose of a tax extension.

It entitles you to an additional six months to file your tax return — moving your filing date to October of the same year. It DOES NOT — I repeat, does NOT entitle you to extend payments on what you owe for the prior tax year. 

You need to file an extension request by the April filing date in the US, and you still have to pay what you owe. If you don’t, the IRS will charge you a steep penalty for failing to file.

How to file for an extension 

Filing for an extension is simple and free. If you’re a sole proprietor or LLC owner, you or your tax preparer can electronically request an extension. Or you can electronically pay what you owe and indicate the payment is for an extension. You can make your payment using Direct Pay using the EFTPS or with a credit, debit card, or check. If you prefer to mail a paper version of Form 4868, make sure it’s postmarked by the tax due date that year. 

If you’re a sole proprietor, filing an extension can help you and your business with cash flow. 

Again, you still have to pay what you owe, but if you contribute to a SEP (Simplified Employee Pension), which reduces your tax liability, you have until October (the exact date varies by year) to make the SEP contribution. Also, if you’re making Roth contributions, you have to make these by the April tax deadline. If you’re an S corp and have a solo 401k, you can file for an extension, but there are specific rules, please check with your tax advisor or CPA.

As a business owner, when should you establish and fund your SEP-IRA plan? 

Plans must be established by the business’s tax-filing deadline, which is as late as the April due date (including extensions) of your business’s income tax return for that year.

Before establishing a SEP, though, we need to take your business cash flow into account.

Let’s chat briefly about cash flow and why it’s so important to have in your business, especially around tax time. When you first start your business, if you’re like most entrepreneurs, you’re just trying to keep afloat. You may not have even seen a profit yet, and any profits you do see, go right back into your business. 

You are paying yourself first, right? And more importantly, do you have a tax savings account? Or what I like to call the “Government’s money account”. Remember, paying taxes is a good thing. If you’re turning a profit, you pay taxes. And on the flip side, if you’re not making money in your business, there are no taxes to pay. So even if you don’t feel like you’re thriving “yet”— it’s still essential to set up those two accounts. 

Money coach tip: Start with three accounts when you start your business: 

1. A Business checking account
2. A profit account
3. A government Money account…aka taxes 🙂

Side note: A book that’s influenced how I run my business is Profit First by Mike Michalowicz. However, start small and make it work for you!

And hey, some years, you got it going on. You make your SEP payments, your Roth (if able to), your quarterly estimates, AND what you owe in taxes — and if you do all this, you’re a rock star! 

If not — it’s okay. Don’t beat yourself up about it. Commit to making this all happen next year.

One of my special gifts as a business intuitive is combining tactical money strategies with the spiritual side. If you feel like you’re in a state of flux in your business and wondering which direction to go, coming back to your big why, or the soul of your business can help. 

When you’re operating in a way that’s aligned with your soul work, everything is effortless; it just flows and you feel like you’re accomplishing more without forcing, hustling, or controlling. It’s like a roller coaster ride when you feel confident enough to let go of the handlebars and raise your arms in the air. Enjoying that free and giddy feeling in your business is pure pleasure.

Money Mindset Exercise

Close your eyes, and picture this. Imagine it’s this time next year. It’s just about tax time and you’re visualizing the amount of money you want to see in your bank account. See yourself sitting down and happily writing the checks (or making those electronic deposits) — to the government, your SEP account, and your Roth (if you meet the requirements). 

Pay attention to everything going on around you…

Where are you sitting?

What are you wearing?

What sounds do you hear?

How do you feel? 

What sensations do you notice in your body? Are you relaxed, free, confident, or something else? 

Stay with these feelings as if it’s here now and happening in the moment. 

TRUST that this is your financial reality.

Do you need more help with the “How” part of managing money in your business?

Let’s get ahead of the next tax season. We’ll explore the tactical and see if you’re making the most of your business deductions. We’ll also tune into specific intuitive strategies your business may be ready for.

Let’s chat….

Book a free call here. 

Make sure you seek tax advice from a CPA or Tax Professional!