With tax season wrapping up, now is a great time to start a new practice of preparing ahead of time. Think first and foremost of the biggest headaches you’ve had as you prepare your taxes this year; what kind of change could help that make your tax preparation experience easier next year?
Print Estimated Tax Vouchers and Prep Payments for Easy Sending
For small businesses who will have estimated tax payments, it can be easy to let those deadlines sneak up on you. Figure out your deadlines now and prepare the vouchers, a check, and the payment envelope. Yes, this may feel silly, but when the deadline looms this will help you feel more prepared for the tax season. You’ll be able to check your account to make sure the money is in the right spot, and then send off the check, no hassle or stamp-searching.
Be Aware of New Legislation
As the tax reform from December 2017 goes into effect over the next few years, certain deductions may go away or be reduced. For example, the tax credit for installing solar panels at your business will be going down after 2019, so many people are working to get energy efficiency upgrades done this year. Your tax preparation software, like HR Block or Tax Slayer, will automatically update, but reading an overview now will help you to make savvy decisions during this year to prepare for tax season next year.
Get Your Records in Order
Most of us discover at least one flaw in our recordkeeping when compiling our taxes. Figure out if you need a new filing cabinet, a better online bookkeeping software, or just some clearly written instructions so that multiple people in your company understand where the tax documents are and how they are organized. Making those changes now, when the annoyances of sloppy records are in everyone’s minds, will make them stick much better. Then, input your records into a reputable tax software like Free Tax USA or Liberty Tax.
Track All Expenses in a Central Place
One way that small businesses sometimes cheat themselves is by not documenting the many expenses they need to do business and thus paying higher taxes than they need to. Create a system by which many of the people involved in your small business can do their part with things to prepare for tax season; if they all know how to record expenses in a centralized database or spreadsheet, they are much more likely to help you keep your tax burden as low as possible.
Set Aside More Money Than Expected
It is very rarely a bad idea to set aside extra money to prepare for tax season. It can be nice to treat a sinking fund for taxes as if it was also savings for something else; if your business could really use new office chairs, for instance, but they aren’t a priority, call the tax savings account the chair fund. If you turn out not to need the money, you can get the chairs, but first, you get the peace of mind that you are covered if you’ve forgotten a major tax responsibility.
Think Through Big-Ticket Expenses and Potential Depreciation Benefits
Many people scramble to figure out if now is the right time to upgrade a company vehicle or purchase capital investments; these fast choices can sometimes result is worse decision-making. Look at the changes to the tax code that have recently benefited small business owners and start thinking now about whether this might be the year to invest in big capital equipment or a real estate venture. For more information to prepare for next tax season, research through your tax software options, like Tax Act.
CUE Marketplace offers managed tax preparation and bookkeeping software, from QuickBooks to Xero, as well as FreshBooks and Gusto. Our easy-to-navigate marketplace allows you to compare software and find the features you need most to address your company’s tax situation. Check out our options today!