Just like finishing a test in high school, there is a period of relief because our 2019 taxes are finally behind us, but then, a quick realization that it starts all over again. COVID threw a curveball into the entire fiscal year, forcing many small businesses to regroup and pivot in every way possible. But there are hopes that the next tax year will be less encumbered and more like other years. If you want to be prepared for next year without scrambling to get things organized, these small business tips will help you stay on track. And they will also make the April deadline for the following year more attainable.
Keep Tabs on Receipts
As a small business owner, throwing your receipts into a shoebox is not the best way to ride out the year. Receipts are not something to save up until the end. If used properly, they will help to guide you about the financial health of your organization and where money is being spent. Also, keeping track of your deductions can help to determine where you stand and what you can write off. The more organized you can stay all year, the less stressful tax preparation will be.
Keep Detailed Records of Expenses and Receipts
The more detailed you can be about your daily expenses and revenues, the less likely it is that everything will pile up. Use a software program that compiles and connects all of your business financials, from payroll to banking, so when it comes time to file, you will have a comprehensive picture of your net loss/income and cash flow.
Plan Checkpoint Meetings
The more proactive you are as a team, the better understanding you will have of the snapshot of your entire organization. Breaking your tax information into smaller pieces will help you to structure it better and gain knowledge about your overall financial health.
Don’t Go It Alone
As an owner, you want to maintain control over your business processes. But the key to a good financial outlook is relying on experts to handle what you are not an expert at. A good accountant can help you with things like lowering your IRS payments, be abreast of new tax law changes that affect you, and ensure that you are doing everything to come out ahead at tax time instead of owing big time.
Organize Paper Records
When using cloud-based accounting software, it might be tempting to shove the paper copies somewhere or even to get rid of them, but that is a huge mistake. You have to keep hard copies of your financial documents in case you need to prove your numbers. If you organize them well, then your accountant won’t have to sift through things to find the originals, which will save them time and save you money.
Make the Deadlines
You have to deliver your tax forms to employees and contractors by January 31st of every year. Your company’s year-end information won’t be available until the end of the year, but that doesn’t mean you can’t get a jump start by gathering things before the deadline. When the end of the year approaches, make sure that you have all the pertinent information ready like names, addresses, paid time off, Social Security numbers, total wages, the number of exemptions, and healthcare and retirement contributions. When it comes to independent contractors, have taxpayer identification numbers, names, addresses, and total wages paid.
Maximize Your Deductions!
If you let any deductions fall by the wayside, then you are throwing money out the window. Almost all business expenses can be written off, including things like office supplies, mileage, employee meals, and loan interest. If you are a start-up company, then there are potentially even more deductible expenses.
Use Only One Corporate Credit Card to Track all of Your Expenses
By using one central credit card to pay all of your expenses, you will have a comprehensive set of statements to use for your spending. Also, if you choose one that comes with a lot of benefits, then you will be getting the most for the money that you spend. In addition, should you ever need verification of your spending, all you have to do is print out your statements via the computer to give to your accountant as proof.
Don’t Miss the Deadline for Filing!
You must file in time for the tax deadline. Even if you are not completely ready, make sure to fill out the correct paperwork to file an extension. Create useful steps and deadlines so there isn’t a mad rush to get things done, and so you are mindful of what needs to be completed and when. If you miss your file date, that might send up a red flag to the IRS, which could end up costing you more if they look hard into your financial records or tack on penalties and fees.
As we say goodbye to 2019 taxes, bear in mind that the next year is already upon us. The best way to use your financial information to your advantage, be ready to meet the deadline, and have all that you need when your accountant needs it, is to follow these quick tips for your tax preparation to make everything go more smoothly. Contact Current Accounting today to discuss how we can help you financially - not just during tax time, but all year long.