Have you ever wondered why weeks or months after
Well, maybe there is something YOU can do to help expedite your Tax Filing.
Here are some simple tips you can follow. This will reduce your waiting time and also reduce your stress.
**ORGANIZE YOUR DOCUMENTS YEAR ROUND!!**
Most people wait until the last minute to gather their tax files, organize them and submit them to their Accountant. It might be helpful to have procedures in place that keeps your tax records organized throughout the year. Organizing a tax folder, with different sections for your specific tax documents might help keep some order in your business.
Although keeping physical receipts is archaic, many small business owners still do it. To make the task easier, try investing in a receipt sorter and organizer such as Neat Receipt! Don't have the extra money to spare? Simply organize your receipts into categories. Make a category for gas receipts, office supplies receipts, business meals receipts etc. If your receipts include non-deductible items, use a highlighter* to highlight the items that ARE deductible, summarize all the deductibles and write it on a sheet of paper or run a tape to show the total deductibles. If your accountant has to do this work for you, it will be time consuming, causing your tax filing to be delayed and will mean you may have to incur additional tax preparation costs.
*TIP: Yellow highlighter is the only color that photocopies well!
3. Organize your 1099's and all your INCOME paperwork in one file. This will save you from possibly underreporting your income or paying more taxes than you have to. And we all know we could use a break! Every deposit item shown on a bank statement may be classified as income, so if you know it was a capital investment, make sure you advise your accountant and have proof!
4. Ask questions and inform your accountant of any tax altering changes in your business over the past year. Remember, accountants aren't mind readers.
5. If you are a little more modern and use bookkeeping software such as QuickBooks, here are some tips for you!
TIP #1: Make sure you have a bank account solely dedicated to your business. When completing business transactions, ONLY use the business account. One major mistake that many people do is to use their business account for personal expenses. This is known to the IRS as comingling of funds and is severely frowned upon. This also reduces the time your accountant must spend sorting through your deposits/income and your expenses, which might also mean higher fees to be paid to your Accountant. Maintaining your business account for business transactions only, lets you know that your account is a true reflection of your business.
TIP #2: Make sure your bank account is reconciled on a monthly basis; this will ensure that your books are a true reflection of your transactions.
TIP #3: If you credit card payments are being made through your business account your credit card purchases should be accounted for within your books. However, many people forget to record their credit card purchases and therefore improperly understating there expenses for the year which ultimately results in a higher taxable income!
TIP #4: Before year end, consult with your tax professional to see if there are any legitimate tax beneficial transactions that can be entered into your books.