As the April 15 tax deadline looms closer, small business owners often resolve to improve the way they organize and manage their financial and tax records to make tax preparation less painful. Here are 8 tips you can implement to reduce tax-time stress.
- Ask your tax preparer. Your tax preparer may already have a system you can follow to reduce the amount of work they have to do, ultimately saving you money. If you are cloud-based, you can set-up an account for your tax preparer to access directly.
- Digitize your documents. Gone are the days of the receipt-filled shoebox. The IRS accepts digital copies of receipts, which enables you to use tools such as Zoho Expense and BizExpense to manage receipts; TripLog and MileIQ track mileage using GPS; and the BizXpense mobile app tracks both mileage and expenses.
- Minimize your paper. Even with cloud-based accounting and digital expense management, you will still need to manage some paper documents. Keep paper organized and to a minimum by using a portable file box that you can take with you to your accountant. Be sure to “back up” with copies in a second box kept safely at home.
- Have your W-2 and 1099 form information ready. Keep your employee and contractor information up-to-date, so that it’s ready to go in advance of the January 31 deadline for delivering W-2 and 1099 forms.
- Take your deductions. Tax laws change year to year. Before you start your preparation, ask your tax preparer which tax deductions and/or credits apply to your business. Visit the IRS website and check your state for tax credits that apply.
- Use a business credit card for expenses. Simplify your tax organization by using a business credit card for expenses. Most cards provide a year-end summary of expenses sorted by category. Be sure to pay your credit card balance in full each month.
- File on time. Be sure to calendar all tax filing deadlines with “due dates” for your to-dos to be ready in time, especially if you have to make estimated quarterly tax payments.
- Make “fiscal fitness” part of your on-going routine. You can’t expect to be ready at tax time if you only organize once a year. By blocking in weekly or monthly time on your calendar and keeping the appointment with yourself, you’ll be in great shape at tax time.
For more guidance on organizing and managing your financial and tax documents throughout the year, contact the Economic Development Collaborative-Ventura County. Conveniently located in Camarillo, California, we’re here to help.