Running a business is hard and often requires you to wear many hats. Managing your business finances can be especially important and time-consuming when it’s time to file your business income taxes. Here are five things you can do throughout the year to help you during the tax filing season and beyond.
Tip #1 – Meet Regularly with Your CPA
You should be working with your CPA all year long, not just during tax filing season. If you don’t have a CPA, it is time you get one. A CPA is a trusted advisor to a business owner not only at tax time but throughout the year. By working with your CPA, you can better understand how your business is performing and they can provide recommendations to improve profits and cash flow while reducing your tax liability. If you hear from your accountant only around tax filing time or they offer only basic tax and bookkeeping services, we recommend you find a new one. A CPA who is more advisory in nature will be worth the investment if you want to grow your business.
Tip #2 – Go Digital/Paperless
It’s time to retire the shoebox full of receipts and go digital. This will allow you to keep track of all your income and expenses throughout the year and help you stay organized. Having everything digitized will allow you to easily find documents and receipts as well as manage your finances in real time. There are many cloud-based accounting products out there that allow bank and credit card feeds to simplify the accounting function.
Tip #3 – Perform a Tax Projection before Year-End
This starts with clean books throughout the year. You should meet with your tax professional prior to year-end (September or October) to project your taxable income. This not only gives you six months to plan for the tax but also the opportunity to make tax-reducing decisions before year-end. This is a habit successful business owners practice religiously.
Tip #4 – Separate Personal and Business Expenses
Keeping your business expenses separate from your personal expenses will save you time and stress when filing. If your business and personal expenses are not separate, you can run into major issues if the IRS audits you. It is vital that your business have its own separate bank account and credit cards.
Tip #5 – Payroll
We recommend hiring a reputable payroll service. The tax payments and filings can get complicated, and one misstep will have you responding to tax notices from various government entities, which can be burdensome.
We love the entrepreneurial spirit of business owners. We understand them and can help turn their challenges into opportunities, resulting in more profit and lower taxes. For 25 years, Apex CPAs & Consultants has been serving growth-minded small businesses with accounting, tax and advisory services. It would be our pleasure to help you and your business. Visit us at apexcpas.com.