Top 5 Ways to Get an Early Start on Your Taxes
Business tax preparation is not for the faint of heart. It’s clear that the amount of paperwork and recordkeeping it entails is a huge burden for companies large and small across the USA. That in itself is a powerful argument for further tax reform, because it’s a lot simpler in many other countries. Meanwhile, though, we’re happy to have a job that makes life easier for our clients. Letting us take on the burden of bookkeeping gives our clients a lot of breathing room and time for more enjoyable business activities. There’s still more that every small business owner can do, though, to minimize their own burdens and avoid the horror of last-minute tax panic.
5: Keep All of Your Old Records Handy
The IRS can audit individuals and businesses going back six years. For that reason, it’s always a good idea to keep at least that many years’ records on hand. Many professionals suggest keeping seven years’ records, just to be safe.
The most important of these is the previous year. Make sure that whenever you do your taxes, you have last year’s return and all the records that back it up close by.
4: Keep All of Your Current Records Tidy
For the love of heaven, don’t just throw your receipts and invoices in a shoebox. We strongly recommend keeping everything carefully organized in chronological order. Better yet, it’s never been easier to scan all of your documents as they arrive, and keep them handy right on your smartphone via cloud storage. Do that! At business tax preparation time, you’ll be immensely grateful to find everything in order and backed up!
3: Be Strategic With Your Expenses
If you know the kinds of deductions you can take, you should also know when it’s best to take them. Major capital expenses that you can write off may be more advantageous either before or after the end of the current tax year. To find out which it is, you’ll need to know the current status of your taxes. If you will probably owe a lot this year anyway, it may be better to wait and claim those deductions next year.
Also, smaller deductions like the ones you can take for expenses relating to business lunches add up.
“While you may not be able to have business lunches every day, you should strive to have several a month. If you purchase lunch, either dine-in or take-out while you work, you can deduct a large percentage of your meal expenses. So, if you and your partners or employees have meetings, schedule them over lunch to deduct 50% of meal costs while conducting business. Just be sure to keep all of your receipts and keep the expenses within reason.” — Julie Morris, jumpstart-hr.com
This tip is important because you’ll have to be aware of your tax position to be able to really take advantage of it. Your bookkeepers and chosen tax professional can assist you on this point.
2: Keep Up With Estimated Quarterly Taxes
To avoid problems during the time you’re preparing your annual filing, make sure that you keep up during the year with your estimated quarterly taxes. Some small business owners and independent contractors may not be aware of the penalties for skipping these quarterly payments. Said penalties can represent a huge additional burden and a lot more paperwork, all of which you can easily avoid.
1: Work with Professionals on Your Business Tax Preparation
This is the most important tip we can possibly offer. The reason for that is because unless you yourself are a CPA or other tax professional, it’s extremely unlikely that you’ve had the time or motive to discover the ins-and-outs of the latest legal reforms that would affect your business tax preparation. You don’t likely know all the fascinating ways the IRS offers you incentives and deductions you can take to minimize your tax burden. It’s ironic, because tax laws in the USA are designed to encourage the kind of business activity that leads to wealth. That may seem counterintuitive, given the obnoxious amounts of paperwork, but it’s true. Think of it as a reward for diligence, organization, and resourcefulness. As well, for teamwork. You specialize in what you’re good at, and you partner with a tax professional who does the same.
SyncLedgers gives you even more space to do what you’re best at, by taking on the work of diligent organization. We keep careful track of all the business expense and income records that you send us. We then work closely with the tax professional of your choice to help ensure that you keep as much of your company’s hard-earned money as possible.
Contact us today to start saving bookkeeping time and to get a huge head start on your business tax preparation!