As a small business, tax time can leave you boggled with stress about filing your returns without the proper preparation. It should be implemented bit by bit throughout the year so that all the data you need for the IRS or other governing agency is neatly recorded, organized, and ready to go for less hassle.
It is also especially important if you are working with an accountant, whom you should also be making use of throughout the year, so they are familiar with your business and able to provide you with the best services come tax season.
That being said, some tips to help small businesses prepare for tax season include:
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Sync Your Financial Records
You can cut down on the time and frustration it takes to record and organize your financial records by syncing your POS and other bookkeeping systems with your accounting software, which will enable you to easily track your inventory data, sales data, expenses, sales receipts, mileage for business travel for you and your employees, and more.
It also helps you keep accurate records and keep all your accountant records in one place, so it’s much easier for both you and your accountant to easily access information as needed.
You must also have the proper documentation and receipts on hand to take advantage of most business tax deductions and to protect against an audit.
Many bookkeeping programs also provide you with data reports, so you can analyze and gather various files concerning your income, sales, e-commerce taxes, and more to also help make business decision-making and tax filing much simpler.
Work With a Reputable Payroll Service
Working with a reputable payroll service helps ensure your taxes are paid on time because they automatically emit them for you quarterly. This way, you have greater peace of mind knowing your payroll taxes are already handled.
Maintain a Separate Bank Account for Sales Taxes
You should also consider maintaining a separate bank account for taxes you’ve collected to help make reporting and paying your sales taxes easier.
It also helps keep you from spending your sales tax funds on other business expenses, which can leave you scrambling to come up with what you owe during tax time.
There are also fully automated sales tax management systems for in-store sales that instantly take out your sales tax each day and then file and pay them to the state for you.
To determine your sales tax requirements, which typically vary by state, be sure to speak with your certified accountant.
Make Decisions Year-Round to Help Reduce Your Tax Bill
According to Lantern by SoFi, “Understanding which business expenses qualify for tax deductions for small businesses can help you avoid overpaying come tax time, and also help guide your business decisions throughout the year,” which can make for a more rewarding tax season.
So to avoid tax time jitters and overpaying in taxes, which can leave you overwhelmed when it’s time to file, then consider implementing the tips above to help you better prepare and benefit from more deductions, so the process doesn’t work against you.
