The best business owners know the importance of an efficient tax season. They also are aware that filing your taxes can be a difficult process, but is much worse if you’re unprepared.
Imagine spending late nights at the office, because you can’t find the document you need, scrambling to get caught up on bookkeeping before a looming tax deadline, or failing to receive a valuable deduction because you didn’t properly track and record your expenses.
These are stressful, yet common situations. The good news is they can be easily avoided.
Getting a jump start on your taxes will save you time and your sanity down the road. Start to prepare for tax season now to be more efficient and avoid chaos later.
Here’s how:
Get Organized
Ideally, you would have a flawless system for keeping all of your business’s records neat, organized, and easily accessible.
A lot of business owners, especially small business owners who wear many hats, don’t always have the time to file important documents in the appropriate places in a timely manner, though. They might toss it in a drawer or on their desk temporarily and plan to deal with it later.
If you want to prepare for tax season, the first thing that you should do is get organized. Go through those drawers and the piles on your desk and figure out what you are going to need to complete your taxes.
A few more ways to get organized include:
- Make sure you have all the necessary forms
- Start by looking at what you filed with last year. You will probably need all of the same forms again.
- Ask your accountant what they will need from you
- Contact your accountant before you meet with him or her to find out which documents you will need to complete your taxes.
- Get your paperwork in order
- You will want to make sure you have all of your expense records, payroll records, previous returns, etc. updated and ready to go.
These steps will help to ensure that there is no scrambling during tax time.
Be Aware of Tax Deductions and Changes to the Tax Law
Over the last year, there have been lots of changes to tax laws, especially for small businesses. Your accountant will know the details about these changes, but it will be helpful for you to stay up to date as well.
For example, some deductions require certain spending requirements, so you will want to make sure you are meeting the deductions that you plan to claim. Now is the time to make sure you are going to hit the maximum deduction.
The article “11 Essential Steps Every Business Should Take To Prep For Tax Day,” published by Forbes, agrees, stating that business owners need to learn about new tax credits and prepare for tax code changes before the start of tax season.
If you want to have an efficient tax season, review your annual tax plan and do some research. This small task could make a huge difference for your business.
Get Caught Up on Your Bookkeeping
When it comes to preparing your taxes, bookkeeping is the most time-consuming, yet essential, aspect. Some businesses might choose to outsource this role, but if you do it in-house, there are many ways to make bookkeeping easier for small businesses.
In regards to taxes, try to be proactive and reconcile your books monthly or quarterly to ease the process when you near year-end. If you have fallen behind on this task though, try to have your business’s bookkeeping up to date by January.
If you do not have your bookkeeping up to date by January, you can greatly delay the tax preparation process. Avoid this complication and complete your bookkeeping in a timely manner.
Be Aware of Due Dates and Penalties
Unfortunately, tax due dates are often subject to change. If you don’t pay close attention to your deadlines, you could have to pay penalties because of a simple mistake.
Smart business owners will build out their calendars of due dates months in advance. They will include all important tax dates, such as quarterly estimated tax due dates, as well as any other significant company deadlines and events. This helps to prevent missing any major due dates.
Additionally, if you are aware of an upcoming due date, but are afraid that you won’t have everything ready by then, file an extension if need be to give yourself extra time. You can do this with most tax deadlines.
Reach Out to Your Accountant
Although there are many steps in the tax preparation process, the best way to prepare is to get in touch with your accountant. They will walk you through everything you need to be ahead of the game before the start of tax season.
If you are searching for a trusted accountant to help you prepare, contact Pasquesi Partners today! We’d love to help your business navigate its way to an efficient tax season!