It’s April 16 – the day many Americans are breathing a sigh of relief knowing their taxes are done or an extension has been filled.
Spend a few minutes talking to American taxpayers and you will learn that organizing and filling out the paperwork to prepare tax papers is on their top five list of things they don’t like doing. And it’s often a task many people procrastinate until the last day or even the last few hours.
By doing things the last minute, it usually causes people stress and worry that they could avoid if they only took the time to do the work ahead of time.
As a small business owner, now is a good time to reflect on what you can do to make the process go smoother next April 15. By following a few easy organizational steps, this time next year you will be thankful and less stressed.
- Talk to a professional tax accountant. We are not experts when it comes to tax laws or what can and cannot be deducted. We can recommend the importance of meeting with a tax accountant to talk about a plan for your business taxes. By creating a plan now, it will save you headaches next spring. A tax accountant can give you sound advice on whether you can make investments in your company that can be a write-off next year. If you had to pay taxes this year, you can discuss with an accountant about paying quarterly taxes. Tax laws seem more complicated then Quantum Physics. That’s why there are tax accountants who can help you navigate the best course for your business.
- Keep a mileage log. If you use your car for business, make sure to keep a mileage log in your car. You need to write down the miles when you started and when you ended and where you went and why.
- Want a receipt? As a small business owner, your answer should always be yes. Think of every piece of paper as a way to protect you in case you do get audited. Plus your accountant will want to know you have them.
- Create a file folder in your office for taxes. There are countless ways to organize your receipts and records. Find the best method for you. What I do is create an excel sheet. Here’s an example of what it looks like: January 2015: Miles Office expenses Dining. Each month, I record what I spent under each category. At the end of the year, I have a record of my totals.
- Keep up on your bookkeeping. Don’t wait until April 12 to enter a year’s worth of receipts and other documents. By doing it once a month, you won’t have to enter everything last minute. I use an excel sheet to record everything.
- Keep good notes. If you took a client to dinner, write on the receipt or in a journal who you took to dinner and what was discussed. It doesn’t have to be too much – just enough to jog your memory. Example: Joe Smith, interview for April 30 paper.
- Keep a business journal or calendar. If you go to lunch with a client on April 30, make sure to note who it was, where you went and what you spent. You can take a picture of the receipt with your phone and then save it to your files, if you choose.
- Most importantly, have a plan and be prepared. I think the reason most people dislike preparing tax paperwork is because it can be overwhelming and even a little intimidating. That’s why I recommend meeting with a qualified tax account and outlining a plan for the rest of the year. The time spent doing so will save you lots and lots of headaches next April.