A lot of small businesses wait until tax season to get all their documents together for tax season. Tax preparation is not something that your business should only think of in January. It’s a year-long process. Take these steps to maximize your deductions and credits, get organized and become familiar with tax documents. It will save you time when you take everything to your accountant to do your taxes.
• Stop throwing receipts in a folder or shoebox, or worse, losing them.
Use today’s technology to snap a picture of your receipts and store in an app to reconcile your books each month. Track mileage for your vehicle using apps that help you keep records of your driving. Sloppy recordkeeping is a big hurdle to efficient tax preparation. Get organized now and you’ll be ready for tax season or an audit.
• Track your deductions and credits.
If you’re not tracking deductions and looking for credits on your taxes, then you might be throwing money out the window. Furniture, office supplies, software and other startup costs are deductions on your taxes. Keep good records to get the maximum on your taxes. Don’t overlook tax credits, such as the welfare-to-work credit or an employer-provided child care credit. Tax deductions decrease your taxable income, while tax credits reduce the amount of taxes you must pay. Both are valuable to your bottom line.
• Be familiar with tax forms.
Don’t rely on your CPA to just take care of your taxes. Have a basic knowledge of the forms you have to file each year and when each one is due. If something gets overlooked, it won’t be your CPA facing penalties and the IRS.
Pay attention to the IRS rules to ensure your business isn’t making mistakes. You might benefit from an annual review from a tax preparation specialist, especially if you try to take care of your financials on your own. Contact Capital Financing Solutions for funding options that can help you upgrade your software to make tax preparation simpler.