Preparation is essential to ensuring your tax return is accurate. Business owners must give themselves enough time to gather the appropriate information to file their taxes. Follow this checklist to correctly prepare for the busy tax season.
1. First things first—Make sure all of the appropriate business transactions are recorded (and recorded PROPERLY)
This is essential in doing your taxes because you want to leave no room for mistakes. Mistakes while doing your taxes can lead to a dreadful time ahead. Getting information fixed, or explaining why the information was wrong in the first place can be a sticky situation that you want to avoid at all costs. You want to make sure you are putting in the extra work throughout the year to make sure this doesn’t happen.
2. Try out the paperless method
It can be intimidating when you are expected to keep your business tax returns for 3 years+ from the time of tax filing, especially if you are doing that all on paper. Receipts can get overwhelming and be wasteful, so paperless might be a better route to go. To begin this, try downloading your documents as PDF’s and storing them in organized folders instead of printing or use excel to document all of your information. You can also use scanners/apps on your phone to scan documents and receipts.
3. 30% Rule
It’s important you consider the fact that you have to pay for federal and state taxes. A good rule of thumb to go by is saving 30% of your business’s income to ensure you have enough money to pay taxes. You can do this by payment, monthly or yearly. Once you have this tax money it is smart to keep it separate from the other money coming into your business.
4. Take it to a Professional
Whether it is for advice or actual help, it is always a good idea to contact someone who knows what they’re doing. Taxes can be messed up easily and hard to fix, so it’s important you know what you are doing. Getting guidance when you don’t know what you’re doing is the best route to go.
Taxes vary among different businesses, but this checklist will push you in the right direction, no matter the company. These are the basic first steps in preparing your business for the dreaded tax season.
