Prepping For Tax Day
Preparing for tax day can be a daunting task for small business owners, but the work you put in now will save you time and money down the line. With tax season fast approaching, here are 14 tax preparation strategies that small business owners should take into consideration:
- Take Inventory of Your Deductions — Know what tax deductions and credits to which your company is entitled, and take advantage of them.
- Review Your Chart of Accounts — Make sure the tax deductions you are taking are properly categorized.
- Analyze Expenses from the Previous Year — Look at last year’s tax filing to determine what tax deductions and credits were used, and make adjustments if needed for this tax season.
- Keep Track of New Business Expenses — Set up a system to track new business expenses, as they are tax deductible.
- Gather All Tax Documents — Have all tax documents and receipts gathered in one place for easy reference when preparing tax returns.
- Double Check Your Numbers — Review tax returns to make sure all tax deductions, credits and tax liabilities have been accurately recorded.
- Understand Your Tax Obligations — Know the tax obligations associated with business income tax, payroll tax, sales tax, etc.
- Research Available Tax Credits and Incentives— Understand the tax benefits available for hiring particular types of employees or investing in certain business activities.
- Stay Up to Date on Tax Laws — As tax laws can change year over year, keep up with tax reform and tax code updates to maximize deductions and credits each tax season.
- Hire a Professional Tax Preparer — Secure the services of an experienced tax professional who understands small business tax needs, tax filing requirements and tax credits.
- Keep Copies of Tax Returns — Always keep copies of tax returns for recordkeeping purposes in case of an audit or other tax issues that may arise.
- Utilize Technology — Leverage technology and automation to streamline tax preparation processes and simplify tax filing.
- Plan Ahead — Have tax planning and tax filing strategies in place early on to avoid tax season chaos.
- Pay On Time — Make sure to pay all tax liabilities by the due date, as late tax payments will incur penalties and additional fees.
By taking these 14 tax preparation steps, small business owners can be better prepared to handle tax season, and maximize tax credits, deductions, and tax liabilities. With the right planning and preparation in place, tax day will be a breeze.
Do your business a favor and get started on tax prep now! It’s never too early to start getting ready for tax time.
If you’re thinking about hiring a bookkeeper for your small business, contact us at BBS Accounting CPA today. We would be happy to discuss your specific needs and how we can help you take your business to the next level.