The last thing you probably want to hear about in December is taxes. We don’t blame you if it conjures up feelings of dread, confusion, and stress. Preparing for taxes—especially for business—can be a challenging process. Fortunately, it doesn’t have to be. Instead of rushing in late February or throughout March to get what you need, you can take your time and ensure you have everything you need by starting this month. Beginning your tax prep now, allows you to catch any errors, reach out to the IRS with questions, or seek additional help during the information gathering process.
Ready to see what steps you can begin using today to make taxes in 2020 a smoother process? Continue reading below.
Begin Putting Everything in One Place
We understand it can take a while to get a reliable information collection system in place. So, if you have not been keeping up with your receipts or other expense documentation, now is the time to get everything into one place. Create a physical folder of all of your financial documents related to taxes so you can either scan them into a system or give them to a CPA. Gather all receipts, forms, and any other relevant information. Also, be sure to label each document. This process will make it much easier to identify what you need at the appropriate time quickly.
Invest in an Accounting Tracking System
It may be tempting to do everything on paper, but we live in a time where you can add some efficiency to the tax preparation process by investing in an accounting system. Many allow you to scan receipts and paper documents, issue and organize invoices, monitor cash flow, and conduct a variety of financial analysis reports. If you have someone who handles your accounting, having everything included on an accounting app makes tax preparation more straightforward for them.
Start Gathering all Your Deductions
Did your company donate to a charitable cause this year? How much equipment or software did you purchase? Do you have any property that you are renting out to another company? Answering all of these questions is essential to preparing your taxes. Take some time to go over every expense and see what you can deduct. Also, be sure to take the time to take a look at the IRS guidelines for business deductions to see if there have been any updates or changes.
Get in Touch with a Professional
Now is the perfect time to determine if you and your accounting team may need a bit of extra help before April 15, 2020. Do you have any questions about categorizing expenses or your deductions? Also, are there any additional forms you may need? Now is the best time to begin reaching out to professional CPAs, or a firm. Those that like to get a head start will likely start reaching out for accounting services in January and February. So, beginning the process of finding the right person now will put you ahead of the game.
Become Familiar with New Laws
As stated above, tax laws are consistently changing from year-to-year. Something you may have been able to write-off last year may not be eligible this year. At the same time, a state law may have also changed. Don’t get caught without knowing the new standards. Your accounting team, as well as an experienced tax professional, can help you deal with this. Nevertheless, it’s never a bad idea to understand these new laws yourself so you can better communicate with your accounting team.
2020 Doesn’t Have to Be a Stressful Tax Year
Planning and intentionality can go a long way when it comes to tax preparation. While you are likely in the process of wrapping up 2019 and putting the final touches on projects, you should add tax preparation into that process. All of the steps above allow you to walk into 2020 with everything you need organized and in one place. You don’t have to frantically search through papers, obsess over receipts, or worry about new laws. Even if you are not able to finish everything before January 1, just getting started will put you in a much better spot. So, take 10 to 20 minutes from now until the New Year for tax prep, you will thank yourself as March turns into April.
The Atlanta Small Business Network, from start-up to success, we are your go-to resource for small business news, information, resources.
Follow us on Facebook here and stay up to date or catch-up on all our podcasts on demand.
While you’re here, don’t forget to subscribe to our email newsletter for all the latest business news know-how from Atlanta Small Business Network.