Preparing for tax season doesn't have to be an all-or-nothing, last minute game of "beat the clock". Here's how you can prepare throughout the year.
Tax season starts in January and ends in April, but you can't afford to wait until it's time to file to begin preparing.
Tax season starts in January and ends in April, but you can't afford to wait until it's time to file to begin preparing. The IRS estimates that 90 percent of all taxpayers will use tax software or hire a person or company to help them prepare their taxes this year. This means that accountants will be busy as soon as January rolls around.
If your business is like 80 percent of all businesses in the U.S., it will take at least two weeks for you and your employees to gather all the necessary information needed for filing taxes each year—and much longer if there were significant changes from last year's filings (think merger/acquisition, new locations opening). If someone doesn't start gathering information early on, they may find themselves overwhelmed by the amount of work they need done when they get started late in April or May.
The last thing anyone wants during tax season is stress over how much money they're losing due to late fees because their accountant couldn't finish everything on time due to another client taking up most of his/her time!
Assess your business' financial health through the year.
Business owners can take advantage of this time to assess their financial health and make any necessary business decisions. This assessment will help them plan for tax season, which is just around the corner. Here are three ways you can do a quick assessment of your business' financial health:
· Review your income and expenses for the last 12 months. Then look at your monthly business operating statements for the past three months, as well as other documents that may give you an idea about where you stand financially (such as invoices from suppliers). Compare these numbers to each other so that you get a sense of how far off they are from each other—and if there are any patterns or trends in terms of how far off, they are. You may find some big differences between expected sales figures and actual sales figures over time; if this is happening, it could be worth looking into why so much money isn't coming in as planned.
Stay up to date on tax rules.
One of the most important ways to stay prepared for tax season is by staying up to date on tax rules. If you’re not sure where to begin, the IRS website offers information about each year’s filing requirements, as well as an extensive archive of past publications and documents. And if you need more help from a professional, your accountant should be able to give clear guidance as well.
You can go one step further by making sure that all your software is up to date with current regulations so that it won’t produce incorrect results or leave out important deductions. It may seem like a lot of effort—but think about how much time and money could be saved in the long run if you get things right now!
Take advantage of tax credits and deductions when they're available.
If you've ever heard the phrase "tax season," it's likely because you're trying to get a handle on your own taxes or those of your business. The fact is that tax time can be overwhelming and frustrating, but it doesn't have to be. Here are three tips for making sure that your tax season runs smoothly:
· Take advantage of tax credits and deductions when they're available.
Tax credits are a dollar-for-dollar reduction of your tax bill, while deductions reduce your taxable income. Both can be helpful in reducing what you owe at the end of the year, so it's important to know which ones apply to your business if possible—and follow up with an accountant if there are any questions about which ones should apply or how much they apply towards overall costs.
· Know when filing deadlines are coming up—and plan accordingly! Even if some companies might be able to take advantage of extensions (which may only delay having their taxes filed), others cannot afford lengthy delays without incurring penalties and interest fees from both federal and state governments alike! So, make sure everything gets done well before April 15th rolls around again next year!
You'll be happier and more confident come tax time if you take these steps throughout the year.
You'll be happier and more confident come tax time if you take these steps throughout the year. Tax preparation is a lot easier when you do it throughout the year, rather than waiting until the last minute to pull all your records together. It's better to be prepared than surprised when April 15 rolls around.
Taxes are also a lot easier to deal with when you have your financial records organized and up to date. If everything is in order, then taking advantage of tax credits and deductions will be much less stressful on deadline day. This can save money too!
If you follow these three tips, you’ll be happier, more confident, and less stressed come tax time than ever before. Plus, your business will flourish in the coming year when you can devote all your time to running it instead of scrambling for last-minute tax deductions or worrying about whether the numbers on your financial statements are accurate. Don't wait until April 15th rolls around again to start doing a better job with your taxes!
Need help organizing and preparing for tax season? Book a consultation with one of our professionals to discuss how we can help you!