Take the Stress Out of your Small Business Tax Preparation
Many small business owners begin feeling dread toward the end of the calendar year, and certainly in the first couple months afterward as they anticipate another season of filing their taxes. Much of the dread can be filtered out of this process by making your tax reporting a year-round activity, and keeping track of all expenses and incomes, as well as planned deductions.
You can also take a lot of the sting out of tax reporting by engaging the services of a paid tax preparer, but that doesn’t completely take you off the hook. You’ll still have to gather up all the relevant materials so that they can be reviewed by your tax preparer, to ensure that accurate information can be entered into the necessary forms before filing. Here are a few steps you should take prior to scheduling an appointment with your tax preparer.
Gather Deductions and Credits
Regardless of what kind of business you have, you’re still a business owner, and that means there are some common business expenses that you are entitled to when declaring your taxes. If you overlook these, it’s roughly equivalent to flushing money down the toilet, but on the other hand if you overdo it, and claim business expenses which were actually personal in nature, you’re setting yourself up for trouble.
Automate Your Records
The days of the paper trail are over. Collecting receipts and paper statements are way too time-consuming, and properly belong to another age. You’ll make things a lot less painful by having all of your transactions recorded in spreadsheets or other software expressly marketed for the purpose.
Know Your IRS Forms
This doesn’t mean you should go to the IRS website and memorize all the possible forms that can be downloaded. Instead, it means that you should become familiar with the main form that you will be using to file, for the specific type of business you operate. You should also be familiar with any of the attachments which might be necessary to provide additional information.
Make Copies of Important Statements
It could be a big time-saver for you if you have copies ready of all your important financial statements, so you can leave a copy with your tax preparer, while retaining a copy for yourself. In this grouping, be sure to include any partnership agreements, receipts for deductions, payroll documents, bank statements, depreciation schedules, asset purchase details, and the prior year’s tax documents.