Prerequisite disclaimer: nothing in this article should be considered tax advice. Please consult a CPA or tax professional before making any tax decisions.
What’s the most stressful time of the year for you as a business owner? Is it the winter holidays, when you’re struggling to keep enough inventory in stock and finding seasonal employees to fill in for sick workers? Is it the post-New-Year, dead-of-winter blues, when transactions are low and you’re struggling to get out of a sales slump? For some business owners, the most stressful time of year is tax time.
But it doesn’t have to be that way.
Sure, managing payroll tax, income tax, and sales tax isn’t a labor of love. After all, nobody loves preparing their taxes. However, if you know how to properly prepare and do so well in advance so your tax preparer makes sure you’re getting the maximum deductions, tax prep won’t seem so burdensome.
The Helter Skelter approach to preparing your tax information is unwise, both from a health and financial point of view: the stress is bad for your immune system, and in the rush of preparing your info, you may overlook some deductions, which will cost you.
Schedule Tax Prep Well In Advance
If you’re a small business owner, the first thing you need to do to file responsibly and avoid paying penalties is simple: set a timer. It may seem obvious but some people procrastinate and scramble to get all their tax information to their preparer. To avoid this scenario, set a timer in your phone. Write a reminder in your day planner. Schedule an event in your Google calendar. Don’t do just one of these; do them all!
Keep Expenses Separated
Are you keeping business from personal expenses separate, all the time? If not, you should be. Especially if you’re a self-employed small business owner. Figuring out the amount of allowable deductions will be much easier if you make purchases with a business credit card instead of a personal one.
No More Shoeboxes
Perhaps the antiquated method of keeping business-related receipts in a shoebox still works for you. But in the 21st century, small business owners are blessed with easy to use software, such as EZ Tax Return, and more popular choices such as TurboTax and QuickBooks. Some programs are even free.
If you have a state of the art POS (point of sale) system, the software can sync with QuickBooks or other business transaction software.
Don’t Do It Yourself
Software programs make it easy to keep track of debits and credits, however, unless you have 100% confidence in filing yourself, have a professional tax preparer or CPA file for you. This is especially true if you don’t know how to maximize deductions for depreciation and inventory write-downs and other less obvious deductions.
Don’t have your POS synced with accounting software? Contact us today for a demonstration.