Tax season is a stressful time for small business owners. It can be overwhelming to assemble documents, understand your filing status, and find an accountant.
A little preparation can go a long way in making filing your taxes easier. To help, we’ve compiled a list of critical steps that small business owners should take to prepare for the coming tax season.
Gather Your Receipts
Gathering your receipts well before tax season is crucial if you’re a small business owner. The sooner you’re ready, the less time your preparer will take to complete and submit your taxes, which can result in a quicker refund.
As a business owner, you’ll likely give and receive plenty of receipts throughout the year, making organizing them challenging. It’s also important to know what receipts to keep for taxes to maximize your write-offs. Receipts are vital supporting documents that help provide a clear picture of your business’s income and expenses. But if you need to have your records in order, you could face audits or be denied claims to deductions.
Therefore, consider gathering all your receipts in January and storing them in an electronic storage system. This can be done with a scanner (if you prefer paper receipts) or with a digital receipt app, whether you use a hard drive or a flash memory card back up the files to protect them in the event of a crash. You can visit https://www.retailmenot.com/view/hrblock.com to find online filing options.
Review Your Payroll
Getting your payroll done right is essential to maintaining your business’s tax compliance. It involves calculating and paying federal and state income taxes, Social Security and Medicare, and unemployment insurance each time your employees are paid.
In addition, the IRS requires that you file a quarterly Form 941 and an annual Form 944 by January 31 each year. Keeping up with these deadlines is critical for any small business owner, and there are specific steps you can take to avoid fines and penalties that the government can levy.
One of the best ways to ensure you do the right thing in the payroll department is to review your pay stubs regularly. Specifically, provide your stub’s practical terms and figures, such as gross pay (total earnings before taxes), deductions, and net income.
Schedule a Meeting with Your CPA
If you’re in the market for a new CPA, scheduling a meeting with them well before tax season is a good idea. This will allow them to take care of your business taxes early in the year and also provide time for you to discuss any plans or questions you may have.
During this appointment, you’ll want to bring your receipts, tax forms, and other essential documents to review and prepare for tax preparation. This will save your CPA an hour of rummaging through receipts and guessing about numbers, so be sure to get organized.
In addition, you’ll want to be aware of any significant life changes that have taken place since the last time you filed your taxes. These can affect how your tax return is prepared and what deductions you can claim.
Your CPA will be able to answer these questions and offer advice to help you reach your goals more effectively and avoid making costly mistakes. However, you should know that they are swamped during tax season, so it’s best to meet with them outside the busiest period to get the most out of your relationship.
Meet with Your Employees
One of the best ways to make your employees feel a part of the process is by meeting with them regularly. Scheduled meetings with HR representatives can be a great way to answer employees’ questions and provide helpful information to help them through tax season.
During these meetings, ask employees about their experiences with the filing process and what they would like to see a change in the future. This will give you insight into the issues your employees are most interested in hearing about and help you address them in the future.
Employees also want to know that their work is essential. Showing them that their hard work is appreciated will boost morale during a time that can be challenging for many employees.
During this debriefing, discuss any problems your employees encountered during tax season 2022 and look for ways to improve your processes in the future. Then, you can identify and fix the issues holding your firm back during this busy time.
Review Your Financials
Whether you’re filing your taxes yourself or relying on a professional, preparing for tax season before it begins is essential. Following a checklist and using the right tools ensures your taxes are filed accurately and on time.
Start organizing your receipts and documents early in the year to save yourself from last-minute headaches. Then, you can send them with your financial statements to your accountant or tax pro.
As you review your receipts, categorize them as taxable income or deductible expenses, making them easier to organize. If you have a large purchase, such as furniture or equipment, add the details to an asset account, so your accountant can easily find them on your balance sheet.
It’s also good to reference last year’s tax return while working through this. This way, you can keep up with new deductions and allowances as they come up. This will help you to save time and avoid costly mistakes.