Written by: Alex Bulmer
It’s not a secret: Americans don’t like Tax Day. A 2014 survey by Pew Research Center, found 56% of Americans don’t like doing their taxes, while 26% absolutely hate it. Whether you’re running a large corporation or a small business, you’ll want to leave yourself plenty of time to prepare for Tax Day. We have compiled a short list every company should do to prepare for that Tax Day deadline.
- Examine your Chart of Accounts:
As your business grows, there are often new categories of expenses and income. It’s important to review your chart of accounts with your CPA at the end of each year and make sure you have categorized everything correctly so that you can take advantage of any deductions that are available to you.
Deductions are your friend when it comes to filing taxes, so if you have been thinking about purchasing new equipment or materials now is the time to do it. Don’t let the government-sanctioned exceptions for businesses go to waste—consider making upgrades or capital investments before the financial year comes to a close.
- Keep Adequate Records
First, you must be able to prove that you’ve paid everything you owe. That includes employee taxes and employer taxes. Pay them and document them as you go, rather than scrambling to gather funds at the last minute. It’ll be much easier to keep everything on the up and up with the IRS if you don’t procrastinate.
In addition, clearly define your income and expenses. Ensure you have good records. The cleaner and more detailed your files, the more prepared you’ll be as tax time rolls around. You want to define your income and your expenses clearly. However, the best step you can take is setting up a meeting with your advisor to prepare your tax filing plan.
- Incorporate tax planning into your year-round activities.
Pay your taxes and do a thorough review of your cash flow projections each quarter (monthly would be better) so you’ll be ready to pay your tax bill on time. You can’t get financing from many quality, affordable lenders if there’s a tax lien on your business. Before you plan or make a big purchase or investment, be sure the money you have available won’t be needed to pay taxes due tomorrow. In essence, business owners can face devastating financial events if they don’t build and execute their tax-mitigation strategy in real time, in the same year as they’re earning income.
Tax deadline strategy boils down to this: the earlier, the better. You’ll have more of your accountant’s focus at the start of tax season, which is the best time to strategize. Plus, as long as your return is prepared, you can wait to file if you owe money. But for those who are due a refund, filing early might be the best option. Waiting until later in the tax season robs you of those choices.
About the author:
Alex has over 23 years in the restaurant industry and 7 years’ experience in the bookkeeping & accounting industry. He’s also a QuickBooks Pro Advisor.
As a restaurant owner for over 16 years, Alex knows how daunting accounting can be for the small business owner, but he also knows the importance of understanding the numbers to run the operations of a business efficiently. Either you are too busy running the operations of your business, or perhaps there is a simple lack of knowing what all is involved when it comes to payroll, or perhaps it is a severe case of paralysis of analysis. In either case, it is his aim to be that trusted partner and consultant (CFO if you will) to aid in the financial, payroll and human resources part of the business so you can focus on why you got into business for yourself in the first place – enjoyment.
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