How to Manage and Avoid Tax Debt as a Small Business Owner with ADHD
Tax debt is a heavy weight to carry, especially when you're running a small business and juggling a thousand other responsibilities. For entrepreneurs with ADHD, the overwhelm is real, and avoiding taxes until the last minute might feel like the only option, but that adds to the weight you are carrying, and it doesn’t have to be that way. By taking a few steps to manage your finances, you can avoid tax debt and stay on track without the stress.
Separate Your Business and Personal Finances
I’m sorry friend, but if you haven’t done this one yet, it’s time! This one is non-negotiable! Separating your business and personal finances is one of the simplest changes you can make. Opening dedicated bank accounts for your business income and expenses ensures clarity and reduces the risk of costly mistakes. This kind of financial separation not only helps you track deductions but also makes cash flow easier to manage. When you have a clear picture of where your money is going, you’re less likely to feel overwhelmed come tax season. This will vary depending on where you live, your business structure, and the rules of each financial institution, but you may not need an official business account for this. In some cases, a separate personal account can be enough to get you started with separation.
Schedule Quarterly Tax Payments
Another game-changer is knowing your quarterly tax liabilities and scheduling them or adding reminders to your phone. Many small business owners face penalties simply because they’re unaware of or avoid making these payments. If you aren’t sure how much you should be paying or when to make payments, connect with your accountant/tax preparer, check the government tax website, or log in to your online tax account. Consistently paying smaller amounts throughout the year prevents that dreaded year-end tax bill and gives you a sense of accomplishment knowing you’re staying on top of your obligations.
Knowing the amounts and dates can also give you clear goals to shoot for with your tax savings.
Automate Savings for Taxes
Automating savings for taxes is a brilliant way to protect yourself from the temptation to spend money earmarked for the CRA (or IRS). Every time you get paid, set aside a percentage for taxes. This takes the decision-making out of the equation, making it easier to ensure that when taxes are due, the money is there. You’ll avoid last-minute scrambling and feel more in control of your finances.
Track Expenses
Tracking expenses is another essential step. Instead of trying to catch up at the month's or year's end, try to log your expenses in real-time or at least weekly. This practice ensures you don’t miss valuable deductions and gives you an accurate financial picture. For those of us with ADHD, finding a system that works, whether it’s an app or a simple spreadsheet, can make this process almost painless. Plus, knowing your expenses are in order brings a huge sense of relief.
Taking a little time each week to do this can be a time and money saver. You are less likely to forget when something was and more likely to capture all of your expenses!
Hire a Bookkeeper or Accountant
For tasks that feel like a slog, hiring a bookkeeper or accountant can be a lifesaver. Delegating the parts of your finances that you dread allows you to focus on growing your business. A professional can ensure your books are accurate and help optimize your taxes. This extra layer of support provides peace of mind, especially when tax season rolls around.
Develop a Financial Routine
Developing a financial routine can make all the difference in staying on top of your money. Set aside time weekly to review income, expenses, outstanding invoices and upcoming payments. Consistency helps prevent procrastination and keeps financial tasks from piling up (and helps you avoid missed income because you forgot to send an invoice). By breaking things down into manageable chunks, you’ll avoid surprises and gain a sense of stability in your finances.
Parting thoughts
Managing taxes as a small business owner doesn’t have to feel like climbing a mountain. These steps are simple, ADHD-friendly, and designed to help you feel in control of your finances. But if you’re still feeling overwhelmed, you don’t have to go it alone.
Let’s work together to create a system that works for you and your brain. Book a free consultation with me today and take the first step toward a stress-free financial future. You’ve got this—and I’ve got your back!
