Tax season is right around the corner. It can be one of the most stressful times of the year for entrepreneurs, but it doesn't have to be.
There are a few things you can do all year long and just ahead of the annual tax filing deadline to make it less of a headache.
1. Get Organized
There's nothing like taking control of your business and creating an organized plan of action to help you feel in control of the situation. And that includes taxes.
Create a filing system for all documents and paperwork that you can use year round with folders for different types of paperwork. Keep separate files for:
- Income and revenue
- Company information, such as your EIN, W9 and other documentation
Organize files by tax year so that it's easy to find paperwork if you need it later on.
It's also a good idea to keep track of tax filing forms and when they are due. Put these dates on your calendar so deadlines don't sneak up on you. For most small businesses this includes an annual federal and state tax filing as well as unemployment filings, federal wage and tax statements, and federal 1099-MISC or 1096 forms. There might be quarterly deadlines as well such as quarterly federal tax returns.
Key resource: ADP keeps a database of downloadable tax forms for federal and state filers.
2. Digitize Your Accounting
Stay ahead of the game and digitize your accounting. No one likes to keep up with dozens of receipts and small pieces of paper – and that's an easy way to lose track of exactly what your business is spending.
Use accounting software to keep track of revenues and expenses and even receipts. Then, when tax time comes, all of these documents are in one location. (You won't spend weeks digging for missing bank statements or invoices.)
Key resource: PC Mag compares the best online accounting tools to pick the one that's right for your small business.
3. Be Aware of Tax Law Changes
You're probably aware that sweeping new tax changes were passed late last year, but how will they affect your small business?
Knowing that tax law changes frequently is half the battle. Even when changes aren't as dramatic as of late, even small changes can impact your bottom line. Eliminate much of the stress of tax season by talking with a tax professional about your situation and how you should proceed.
Even entrepreneurs who have filed personal taxes without assistance find the business landscape to be quite intimidating and hiring someone to help can be a huge relief. (Plus, it gives you more time to focus on your business while they handle the taxes.)
Key resource: A tax professional can navigate the ins and outs of new legislation and help you make the right choices for your business.
4. Consult with an Accountant Throughout the Year
Starting to think about taxes for the first time can make almost any entrepreneur break into a cold sweat, but the conversations are easier to manage if you have them regularly.
Hire an accountant and have regular checkups throughout the year so that you always have an idea of where your small business stands. An accountant can help you understand small business tax breaks available to you, what expenses might be tax deductible, how and when to make major purchases and what tax implications lie therein.
Schedule a financial health evaluation with your accountant each quarter to make sure you are on top of your tax situation, and tax season will feel so much easier.
Key resource: Not sure where to start? Entrepreneur has 10 questions to ask before hiring a tax accountant.
5. File on Time
File your taxes online and on time. Filing online ensures immediate receipt of your tax filing – your accountant will provide a confirmation – and filing on-time helps you avoid stressors such as working through extension deadlines and possible penalties.
Extra expenses are an immediate strain on most small businesses; getting your taxes handled on time should not be one of them. You always know the deadline and when, or if, any fees are due.
Key resource: TaxAct has a federal tax calendar with due dates by taxpayer type.
Tax season doesn't have to be a problematic time for your business. Handle it with ease by arming yourself with the right tools to handle taxes all year long. Work with an accountant to make sure that your taxes are handled the right way, leaving you more time to do what you are best at – running your business.