Filing business taxes can be a daunting task, significantly if your accounting functions are not streamlined and your financial statements are not updated in a timely fashion. It can be quite a hassle to gather all those relevant tax documents, account for all that income and expense, and still file the taxes in time without having any penalties imposed.
Most small business owners fail to understand the importance of efficient bookkeeping practice until the tax season hits. They find themselves at odd ends trying to get all the necessary documentation and paperwork done in time to file the taxes.
If you were among the business owner running around last minute or ended up paying penalties in the previous tax filing season, make it different this time around and plan things. While you can conveniently hire a tax lawyer to file the taxes for you, even for that, you will need to provide proper paperwork and financial statements for the lawyer to do their job.
Here are five accounting strategies that you must implement in your business to make tax filing easier.
Hire a professional bookkeeper: first things first, if you do not have a proper bookkeeping framework in your company, it is about time to establish one and start by hiring an adequate bookkeeper responsible for recording all your company’s financial transactions. A bookkeeper differs from an accountant chiefly because a bookkeeper performs merely a data entry function. At the same time, an accountant also conducts financial analysis and helps formulate budgets and strategies for the business. For tax filing, a bookkeeper is good enough, as they enable proper recording of all financial transactions and keeping all the financial statements updated.
Invest in a bookkeeping and tax filing tool: If you have a bookkeeper on board, now is the time that you also invest in proper bookkeeping software. There are countless software available online offering specialized functionalities. Get advice from your bookkeeper and choose the one that suits your business needs best. It is best to choose software that offers detailed accounting functionalities as it may come in handy in the future. In addition to bookkeeping software, also get a tax filing application that will help you integrate your financial statements easily, helping you prepare tax documents quickly.
Emphasize regular bookkeeping practices: Just having the right software and the right person for the job will not cut it. To avoid last-minute tax filing hassles, you must also introduce a stern bookkeeping culture in your business. Emphasize recording all financial transactions in real-time. Set up a work culture that directs your bookkeeper to keep financial statements regularly updated. Better schedule monthly or bi-monthly presentations to study the company’s financial standings. This practice will ensure that your bookkeeper periodically updates all financial records and that no financial transactions go unnoticed. This also minimizes the risk of error in financial statements and allows you ample time to review transactions.
Maintain a record of invoices and receipts: In addition to the timely recording of data, maintain a record of invoices and receipts in a well-organized file. Know what passes essential and what documents can be trashed. Get a proper date-wise organizer to fetch files conveniently. As a bookkeeper, one of the key responsibilities is to make sure all receipts, payment slips, and transactions are recorded, and the proof is also held within files. These can be used as evidence in legal proceedings and can also come in very handy at tax filing.
Start the tax filing process early: Don’t waste the last week to start your tax filing preparations. Start the tax filing process earlier than you usually do, and if needed, hire a tax lawyer to help you file your business taxes easily.
In addition to all of this, make sure that you keep track of all the deductible and home office expenses so that you do not end up over or under filing your taxes.
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