Tax Season Stress
If you find tax season stressful, you are not alone. Many consider the top causes of stress to include: lack of time, lack of money, health issues, and being overburdened. Small to mid-sized business owners face those same stresses plus we can add lack of control to the list.
Tax season stresses fall into literally every category including physical and psychological health issues. According to the American Psychological Association, “an extreme amount of stress can have health consequences and adversely affect the immune, cardiovascular, neuroendocrine, and central nervous systems.” Chronic stress can result in anxiety, insomnia, muscle pain, high blood pressure, a weakened immune system, heart disease, depression, and obesity.
The question is: why does tax season bring on so much stress? For many, the answer falls into the following five categories:
1. Understanding how to manage the financials of your business, including containing costs, increasing revenue, maximizing profits, managing cash flow and allocation of resources – is a very stressful burden placed squarely on the shoulders of the small to mid-sized business owner. The payoff for shouldering the burden can be substantial, but so can the stress. Arguably the biggest source of stress is not fully understanding your current financial picture. Therefore, we recommend that regardless of whether it’s good news or bad, you maintain open and frequent communication with your accountant, so that you always know what your picture looks like in real time – not just historically.
2. And, especially if the news is bad, there are two times in particular that a business owner faces his/her comeuppance: end of fiscal year and tax season. During these times, the reality of your business management practices, and their positive or negative consequences, are at the forefront. Such times of evaluation brings heightened self-awareness – plus the stress and anxiety that goes along with it.
3. Taxes are complicated and there’s a lot of paperwork involved. It’s important to stay organized so that if the IRS requests additional documentation/information, your accountant can swiftly and accurately provide it. Turn to tech and Project Management Software for help organizing paperwork, electronically storing receipts, etc. Why? Because disorganization causes stress. According to Psychology Today, it signals our brains that our work is not done and makes us anxious with feelings of guilt and even embarrassment.
4. The fear of an audit is real. Audits can intimidate even the most confident business owners. Yet the audit process is often misunderstood and does not have to be scary. If your taxes were processed by a competent professional, you have little reason to worry. Your accountant will have not only decreased your chances of an audit by minimizing potential mistakes and audit flags, but also he/she will help de-mystify the audit process by setting expectations and making sure that adequate preparation has been done.
5. If you are savvy enough to recognize that you don’t fully understand tax laws – what applies to your business and what does not, what credits or deductions you may qualify for – and so you turn to a tax professional for help, you may perceive it as giving up some control of your business to an independent third party. And as previously noted, lack of control stresses the body. The Indiana University Kelley School of Business conducted a study, analyzing 2,363 people over the course of seven years. They found that study participants in high stress jobs who felt a lack of control were 15.4% less healthy than their counterparts. We encourage you to think of the process as gaining control of your accounting and tax portfolio, not losing control.
So while tax season stresses can be stifling, your accounting professional is trained and experienced to take some of the burden off your shoulders and provide the expert service that you deserve, lowering your stress and maximizing your business’ potential.
Please contact Mark Zinman, CPA, with any questions or comments at 215-357-2250 or firstname.lastname@example.org.