As the year draws to a close and tax season inches closer, do you find yourself scrambling for invoices, files, and papers you cannot find? Are you kicking yourself for not completing tasks you set out to do a year ago? Are you finding there are still 100 things on your to-do list?
If so, you are not alone. But there are steps you can take at the beginning of 2018 to avoid ending up in the same situation next year, especially as related to your business taxes.
Rethink tax season
Begin preparing for the next tax season by treating it not as a season, but as part of your daily work. Make it a habit. Initially, this may seem like a hassle, but the benefit of keeping all of your documents together will create less work at the end of the year and perhaps help you file your return even earlier. Tax season will not be nearly as stressful for you as it will for most if you rethink the way you approach it.
Start by creating a space just for tax documents in the office. Keep your invoices, receipts, and other documents in this area. Organize the space in a standard file folder system or go digital. Using a scanner or even a cell phone app can help you keep track of receipts and invoices.
If you do your own bookkeeping, try using a basic software, cell phone app, or even Excel spreadsheets to track expenses and log business activities. Keep track of these throughout the year and enter them into your accounting system. Be sure to include milage, entertainment, and even meals.
A designated notes app or just writing on the receipt can save time when reviewing receipts and help you explain how this cost was connected to your business. Having these tidbits of information organized is critical, especially if you are selected to be audited by the IRS.
Talk with a professional
Meet with your accountant throughout the year to ensure you are making the most of your potential deductions. Deductions might include car expenses, home office expenses, or startup costs.
Be sure you research and hire an accountant who best understands your business. When meeting with your accountant, they should be able to tell you exactly what documents they will need in order to complete your taxes at the end of the year. By knowing exactly what these are, you can begin to compile them throughout the year.
Share the plan
Be sure your employees who handle billing and accounts understand what is expected of them throughout the year in preparation for tax season. The entire team needs to know the plan and work together. If they don’t, you risk losing or misplacing vital documents.
If you or your employees use personal vehicles for business, you can deduct the cost of business driving. However, this can only be done if you have the records to back up the data, so tracking your business trips with an app is a great idea.
Set deadlines and stick to them
Set deadlines and arrange meetings with your bookkeeper and accountant early. Remember you are not their only client and many other people are trying to complete their taxes by the same deadline. By meeting early, you will get a head start and have plenty of time to be sure both parties have the documents they need.