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More than a fifth (21 percent) of small businesses are planning to file taxes on their own, without help from tax software or an accountant, according to a Manta survey of more than 1,500 small businesses.
According to Manta’s poll, 30 percent of small business owners are still tracking their expenses with paper receipts—a system that can lead to numerous mistakes.
The survey also found software solutions like QuickBooks are the top choice for keeping track of expenses, with 30 percent of small business owners preferring software solutions.
“We were surprised to discover that 30 percent of small business owners still use paper receipts to track their expenses,” John Swanciger, CEO at Manta, told eWEEK. “With apps like Expensify and Mint, we expected polls to show a decline in owners storing hard copies, especially when they can document receipts digitally. The receipts in the shoebox tactic invites mistakes, and aren’t worth the risk of tax filing fines or mistakes.”
He noted filing taxes without the help of an accountant or software was another pitfall, pointing out that 21 percent of small business owners still do their own taxes without outside assistance.
“As much as we try to avoid mistakes, they happen. It’s easy to miss a detail while filing, but that leads to expensive consequences,” he said. “It’s important to work with a professional to be sure you’re avoiding fines and making the most of any advantageous tax codes designed to benefit small businesses.”
Swanciger said implementing accounting software can be challenging for some small business owners as it poses unforeseen costs that they may not be willing to incur.
“The investment, however, is worth it once small business owners see how the tools reduce their stress level during tax season. Breaking old habits, like storing paper receipts, is another potential challenge for small business owners,” he explained. “Many business owners become accustomed to collecting receipts in a shoe box or container — a highly inefficient method that can actually make gathering year-end taxes even more stressful.”
He said while changing their ways may be difficult for some business owners, they will quickly reap the benefits of switching to online banking and electronically-stored expenses.
The survey also found 63 percent of small business owners use an accountant and 11 percent use online tools like HR Block of TurboTax.
“Accounting software like Freshbooks makes it easy for owners to organize and categorize expenses, create invoices and pull financial reports,” Swanciger said. “By taking advantage of accounting technology, owners mitigate instances of human error, reduce the chances of costly fines and audits, and alleviate much of the stress associated with tax season.”