Do you literally spend several hours, perhaps the entire day, looking for and sorting through tons of paperwork just to file your business taxes? To make the entire process easier and less stressful for you come tax time, below are three practical tips to consider.
Automate Your Processes
There are a number of systems or procedures in your company that you can automate, and this includes bookkeeping. Firms such as ScaleFactor, Inc. offer online bookkeeping software that could help you organize everything. You can try them out and see if they can ease operations.
Try to Use Credit or Debit Cards Whenever Necessary
Relying on cash might seem like a great idea for personal expenses, but for business expenses, this is a nightmare if you want to keep relevant documentation for tax time and potential audits. Cash is very easy to spend but difficult to track, and reconciling them with receipts is virtually impossible.
That said, consider credit or debit cards so you could easily track your business expenses and receipts.
Collect and Organize Relevant Financial Documents
From expenses to payroll, collect everything you can and organize them by category including:
- Office supplies
- Equipment expenses
- Independent contractors
- Business travel and entertainment expenses
- Marketing costs
- All income sources; use subcategories if applicable
- Tax-deductible charitable donations or sponsorships
Make certain to include other categories that apply specifically to your business. The most critical thing for organizing is to ensure that you could identify your expenses and consequently categorize them.
Review your Financial Documents and Check for Deductions and Credits
When you have properly organized your financial documents, review them thoroughly so that you could spot items that you could be credited for as well as items that you could deduct from your taxes.
Consider consulting a professional if you are not aware of current deductions and credits you might qualify for.
Tax season is no doubt one of the most stressful times for businesses of all sizes, but it should not be if you know how to go about preparing for it. Your best recourse is to prepare by applying the tips above to make sure you do not stress yourself come tax time and prevent getting in trouble with the IRS.