Most of the business owners devote their time and effort in increasing their sales and improving their business operation. There’s no need to worry when everything is going well; when the business is earning more than what is expected until tax season comes and then suddenly everybody begins panicking. If you have found yourself facing this dilemma, you’re not alone.
Tax preparation and filing is considered to be one of the most dreaded tasks a business owner can face and as much as possible, they want to stay away from it. But of course, it is something that should not be left in the backburner especially if you don’t want to pay huge fees.
If you want to be more prepared, organized, save time and make the process easier, these bookkeeping tips for tax preparation are what you need:
Prepare a Checklist
A lot of financial documents are needed when preparing taxes. This may include bank statements, credit card statements, accounting records, payroll reports and many more. Imagine if you are gathering these necessary documents while you’re in the middle of your tax preparation, this won’t only cause a lot of cramming, but expect that it’s going to be a mess. There will also be a chance that you might miss some documents which can cause problems later on.
Therefore, it is wise to prepare a bookkeeping tax preparation checklist to cover everything. You’ll be surprised at how much time you will save by organizing your information beforehand. Your checklist should include all financial information and documents you need, all forms you need to accomplish, and all deadlines that you should keep in mind make sure that you file all your tax returns and pay on time. This is a useful reminder and something that every taxpayer must do.
Sort and Categorize Expenses
After gathering all necessary documents, sort each business expense based on their respective categories. For example, automobile expenses, office supplies, utilities, medical expenses, and others.
Since different types of expenses are eligible for tax deductions, grouping them will make it much easier to calculate and claim credits and deductions. But be sure to ask assistance from your bookkeeper to check if your financial information is accurate and that you categorized expenses correctly. It is best to let an expert handle this because making a mistake in this area can be costly.
Store Financial Documents in a Secured Digital Cloud
If you are still using the Shoebox Technique to store your receipts and other hard-copies of your financial transactions, it’s time to consider changing that.
It is highly recommended that you must create a digital copy of all your financial transactions as soon as possible. Whether you are using a bookkeeping software or manually scanning them, this step is very important. Digitally stored documents are accessible, easily searchable, secured and more convenient during tax preparation.
Hire A Professional to Handle Your Bookkeeping and Taxes
Tax preparation is not something that you have to face alone and is oftentimes it is best handled by a tax professional. If you want to save time, money and have peace of mind, you might want to consider hiring a tax professional who will help you get everything done correctly and accurately.
Tax season is here and with all the changes brought by the law and stimulus payments, taxes will be a little more complicated this year.
FAS focuses on providing financial insights that can help you and your business. If you need assistance with bookkeeping, business and/or individual income tax return preparation or cross-border taxes, feel free to contact us! Reach us at email@example.com or at 713-855-8035.