3 Year-Round Habits That Make Business Tax Preparation A Breeze
As a small business owner, tax time will be easier and less expensive if you think about taxes a little throughout the year. How can you do this? The answer may not be as complicated as you think. In fact, it may simply be a matter of developing a few good practices. Here are five that can help any business.
1. Schedule Tax Planning Appointments
Rather than wait until March or April to make a single tax appointment, consider adding one or two tax planning appointments with your preparer at different times of the year. Midsummer is a great time to check in on how things are going in the current year and to see whether or not you're on track to pay your tax bill and minimize it where you can.
In addition, consider a December or January appointment to go over expectations for the new year.
2. Write Down Receipt Information
Saving a pile of receipts to give to a tax preparer isn't the best way to ensure that deductions are maximized. If no one knows the pertinent details about an expense — such as the description, date, and reason — it may not reported correctly on your tax return.
For instance, an item may not be deducted as the right expense or even deducted at all. Items subject to depreciation might not be recognized and consumables could be mistaken for depreciable assets. Ensure the best use of expenses is made at tax time by habitually writing down some details on your receipts when the transaction occurs.
3. Regularly Use Accounting Software
If you're still using handwritten ledgers and written lists, it may be time to switch to an accounting software platform. While learning to use one will take some time and effort, it will result in less work and money savings in several ways. First, rather than paying your tax preparer to go through a pile of hand-written books, you can present them an easy-to-use report from which to prepare the forms.
By working with your accountant when you set up and begin using your new accounting software, you can tailor the expense categories to your business and tax needs. You may also be able to track asset depreciation, link the software to bank statements for greater accuracy, and provide direct access to your tax preparer to speed up their work.
Can your business improve in these areas of planning ahead for taxes? If so, start today by making an appointment with an accountant who offers tax services in your area.