how to deal with tax season stress

 

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April 1st marks the end of the 2018 tax year and the start of 2019. Here’s a basic list of what you’ll need to file on and some easy tips to make sure this stressful time doesn’t take too much of a toll on you.

Start right

It pays to get professional advice in order to set you up properly for your business and accounting & taxation needs from the get-go. The earliest you get the right advice on set up the bigger the benefits to you down the track.

Plan ahead and save

If you have a reasonable estimate of what your tax bill might be you can treat it as a monthly expense and simply put away the money in a savings account, ready for tax time.

Set up a separate account (one that earns interest is even better) and save a portion of every payment you receive. Make sure you also save for your ACC levy payment. At O’Connell & Co we can advise you on an appropriate amount to put aside in your tax account.

Make sure records are in order

Keep a copy of all expense receipts and a copy of what invoices you send out. We can advise on appropriate accounting software to help you do this efficiently. Keep records of any other income or expenses (eg, dividends or rental income). Keep a paper trail of anything that could be a claimable business expense by paying for it through your business bank account. Keep all records for seven years (either on paper or electronically).

GST

Once you’re registered for GST (not everyone needs to so check first) you must start charging GST. It’s important you don’t think of this as your money; you are simply collecting a fee on the Government’s behalf so put this money aside in an account that earns good interest. 

Income tax

You might find our recent article about the different types of income tax useful. As above, saving for your tax bill is the best way to avoid the majority of tax worries; we recommend a minimum of 20% of your income as a good starting point.

PAYE

To avoid unwelcome paperwork with paying employees we recommend using online payroll software to streamline the processing of your payroll. If you wish we can process your online payroll for you or show you how to do this yourself. By using our recommended online payroll software all your PAYE is paid on time and all the necessary and tedious to complete PAYE forms are filed on time with Inland Revenue leaving you free to focus on your business.

Fringe benefit tax

FBT applies to things like work vehicles available for personal use, subsidies on gym memberships or insurance and discounted goods and services through your own company. We’ve run an article on this once before, as it can be a sticky topic.

Trust a professional

Tax is complex and important, and if you get it wrong it can cost you more than it might to engage professional help right from the beginning. At O’Connell & Co we can review your needs and ensure your tax affairs are managed well.

File early

Just like some people like to run their clocks five minutes fast so they’re always ahead, set a hard deadline of one week ahead of schedule and work towards this. Having a week’s buffer built into the process will help reduce any tax worries. 

Take care of your health and wellbeing

All stress is detrimental to your health. Financial stresses (money, bills and debt) are a source of angst for lots of New Zealanders and the effects can be very real; consequences range from the mild, such as depression, poor quality/complete lack of sleep, headaches and moodiness; to really serious effects on your health, like higher instances of heart attacks and ulcers. It can even lower your mental performance at the very time you need it to be working well according to this Stuff article.

A Harvard study found money worries can take up to 10 points off your IQ. Ultimately, if you’re not in tip-top shape physically and mentally, your tax return won’t be either, so here are some things to remember when the pressure starts to get uncomfortable:

  • Try not to fall back on bad habits like smoking or drinking alcohol; these are NOT the stress relievers you think they are.
  • Start early. Focus on what you can control. Break up the job into manageable pieces and set small, achievable goals.
  • Take a break; get your head out of the books and tax calculations and turn your thinking to something else.
  • Find music that helps you focus or relax and listen to this while you work.
  • Don’t burn out. Taking a proper break can be better for productivity overall than continuing to plough through when you’re fatigued.
  • Exercise. You’re at your mental peak for about an hour following rigorous exercise. If you don’t have time for your normal routine during this time, adapt it so you’re still doing something.
  • Make good sleep a priority.
  • Lower or cut the caffeine. Research suggests caffeine exacerbates stress levels.
  • Keep fuelled with good ‘brain food’ such as yoghurt, salmon, avocado, nuts and dark chocolate.

As the old saying goes, the best defence is a good offence so by far the easiest way to avoid tax season stress is to plan ahead and be ready. We understand the complexities of New Zealand tax laws. We work with you to minimise your tax within legal bounds and help you avoid costly penalties. Get in touch for complete assistance and advice you can count on in all areas of business taxation. 

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