Get All Access for $5/mo

As Tax Reform Stalls, Small-Business Owners Spend Up To 150 Hours on Their Taxes A new taxation survey finds that the administrative burdens of paying taxes are more significant than the financial burdens. Here are a few tips on how to keep the time devoted to your taxes to a minimum.

By Catherine Clifford

Opinions expressed by Entrepreneur contributors are their own.

Shutterstock

Small-business owners devote as many as four full work weeks to their taxes each year, according to a survey from the National Small Business Association, a Washington, D.C.-based nonpartisan organization that advocates for entrepreneurs.

Almost four in 10 survey respondents spend more than 80 hours per year completing forms, keeping up with changing regulations and organizing paperwork associated with filing their federal taxes. Another third of small-business owners report spending more than 72 hours per year on the administrative aspects of getting their payroll taxes organized, according to the report, which was released this week. Taken together, that means small-business owners could be spending more than 150 hours wrangling with their taxes.

Related: Business Owners Fed Up With Washington, But Many Are Optimistic on Their Prospects

When asked to identify the greatest challenge the federal tax code posed to their business, 55 percent of respondents chose administrative burdens and 45 percent said that the financial burden of paying their taxes was the most significant. One of the reasons small-business owners struggle with the tax code so much is that it is constantly changing. For example, lawmaker negotiations to settle the so-called "fiscal cliff," a slew of spending cuts and tax hikes which threatened to go into effect simultaneously, dragged on until the very last days of 2012. In the wake of the changes in the tax code, fewer business owners said they took advantage of credits and deductions in 2013 than did in 2012.

Related: Looking to Bolster Your Cashflow With a Home Mortgage Refinance? Consider These Tips

The Obama administration has called on Congress to reform the tax code. While tax reform is stalled in a divided Congress, Sen. Max Baucus (D, Mont.) and Rep. Dave Camp (R, Mich.), chairmen of the Senate Committee on Finance and the House Committee on Ways and Means respectively, have just this week reaffirmed their commitment to pass an overhaul of the tax code in a Wall Street Journal piece they co-wrote. "There are skeptics who question the prospects for bipartisan tax reform. We know we face some fierce headwinds," they say. "We can't let that happen. Tax reform can't be about politics."

Until Baucus and Camp can corral their colleagues into passing tax reform, here are a few tips on how to keep the hours you spend getting your taxes together to a minimum.

1. If you make more than $30,000 a year, hire an accountant. If a small-business owner is spending hundreds of hours organizing and filing taxes, he or she should be outsourcing that work to a professional, says Jody Padar, the CEO and principal of the New Vision CPA Group, an accounting firm in the Chicago area, and a partner with the Xero, a small-business accounting software platform. While cash-strapped entrepreneurs often begrudge spending money on anything that isn't mission-critical, it's often cost beneficial for you to hire an accountant. "You can really be penny-wise and pound-foolish. If it is really bothering them and they are really spending that much time, it's time" to pay an accountant, Padar says.

Related: Tax-Time Crunch: 3 Deduction-Tips To Help Boost Your Bottom Line

2. Buy a desktop scanner or download a scanning app on your smartphone. There is no reason to be "buried in a shoebox of paper" in this day and age, says Padar. Scan your receipts and have them organized digitally. Alternatively, there are a number of mobile applications that allow you to scan receipts on the go. One option is the free Lemon app and another is Piikki, which retails for $2.99.

3. Be diligent to keep your basic accounting up to snuff all year long. "How can you run a business without having a handle on your inflows and outflows? That is not a business owner. That is a hope," says Padar. A lack of organization is also one reason entrepreneurs are spending upward of 150 hours filing their taxes. To stay organized, consider using accounting software such as Xero, QuickBooks or Wave.

Also, cash-flow management software, such as Bill.com, gives business-owners the ability to manage their accounts payable and receivable exclusively. Bill.com can link up with your overall accounting software, whether that is Xero or QuickBooks. The benefit to a separate cash-flow management software is that it gives an entrepreneur access to only the money-management tools that he or she needs most frequently. "You are not overwhelming them with everything they don't need," Padar says. Leave the rest of your books to the accountant, she says.

Related: How to Keep Your Zen During Tax Season

How much time do you spend doing your taxes each year? What recommendations do you have for fellow entrepreneurs looking to save time? Leave a note below and let us know.

Catherine Clifford

Senior Entrepreneurship Writer at CNBC

Catherine Clifford is senior entrepreneurship writer at CNBC. She was formerly a senior writer at Entrepreneur.com, the small business reporter at CNNMoney and an assistant in the New York bureau for CNN. Clifford attended Columbia University where she earned a bachelor's degree. She lives in Brooklyn, N.Y. You can follow her on Twitter at @CatClifford.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Side Hustle

This Mom Started a Side Hustle on Facebook — Now It Averages $14,000 a Month and She Can 'Work From a Resort in the Maldives'

Heather Freeman was searching for a way to make some extra cash — and her cousin gave her a great idea.

Starting a Business

He Turned His High School Science Fair Project Into a Product That Solves a $390 Billion Problem: 'This Has Not Been Done Before'

Vasya Tremsin was just 18 years old when he came up with the idea for outdoor fire sensor company Torch Sensors.

Business News

Why Does Taylor Swift Keep Stopping Her Shows Mid-Song? It's Actually a Great Lesson in Leadership.

Taylor Swift has paused nearly half of her shows while on the European leg of her Eras tour, and the reason is something leaders can learn from.

Side Hustle

This 26-Year-Old's Side Hustle That 'Anybody Can Do' Grew to Earn $170,000 a Month. Here's What Happened When I Tested It.

Stephen Alvarez was working at a dental supply company and following his passion for cars on the side — then an Instagram ad changed everything.

Business News

Melinda French Gates Says This Mindset Hack Helped Her Overcome Imposter Syndrome

Melinda French Gates said she faced (and conquered) imposter syndrome while working at the Bill and Melinda Gates Foundation. Here's how.