Whether this will be your first year or your twentieth-year filing taxes for your business, it is likely never something you look forward to. Even when you have someone you trust to complete your tax forms, the process of assembling the right information can be daunting.
The key to easy tax preparation is maintaining clear records the entire year. No matter what the size of your business, you need to have records of what your company did and what obligations you have to the IRS.
Here are a few tips as tax time approaches for your business.
Gather your records
Technology has been both helpful and frustrating when it comes to maintaining business records. The days of keeping receipts in a shoebox are now long past, but now you may have records in multiple platforms.
Many platforms have sophisticated search tools. When you are searching check all the parameters (especially date) to make sure you find the right document for the correct year.
As you prepare for this year, consider what you can do to keep your records easy to access when tax time comes again next year. For example, if you are using your business email account to manage your financial accounts, consider creating a tag or category label for important tax documents.
Know your deductions
As you learn about the tax code and how it applies to your business, people tend to fall into two categories; they are either overly cautious and do not claim all the deductions they can, or they become deduction-happy and claim too many. Like many situations, the best solution is likely somewhere in the middle.
It is important to understand the deductions that are available to your business and what they mean. As you think about a possible deduction and whether it applies, consider what the deduction was intended to do and whether that applies to your situation.
There may be several parts of your tax preparation that you can do yourself, but it is important to consult with someone who can help you understand the details. Between one year and the next, there are often changes to the tax code, so talking to a professional can help you avoid mistakes.