Tax season is upon us. Owning and operating a business requires a lot of courage, determination and fearlessness. It also demands that you be ready for anything that comes across your path, including tax season. Tackle the tax season like a true CEO as we take you through the tips necessary for staying on the IRS’ good side.
Use the tips below to ensure that the upcoming tax season is a profitable one for you and your startup.
Get all of your documents in order
You’re a business owner, so you should already know the importance of organization. Sometimes managing a startup means wearing many hats, which can open the floodgates of chaos and disorganization. Missing documents, records out of alphabetical order, just complete anarchy.
As difficult as it may be to keep it all together, it’s a must if you’re going to survive tax season. Filing taxes requires the submission of various documents, and if you can’t find them, you’re going to have some explaining to do to the IRS. Prevent this by constantly staying organized.
From the day you set up shop, make sure that you establish some type of system to keep track of all of your documents. From employee files to financial statements to I-9 forms, everything should be accounted for. The more organized you are, the easier filing your taxes should be.
Key takeaway: filing cabinets are your best friend
Hire a professional
Most self-starters believe that just because they create a business, it means that they have to do everything themselves, including accounting. Wrong! Unless you studied tax preparation in college, it’s not mandatory that you do your own taxes.
Instead, hire a trained professional; someone that has worked in the accounting field for years and knows where to find your startup possible deductions. Due to the nature of your business, this service may be a little pricey, but I assure you it’ll be well worth the money.
Taking matters into your hands when it comes to managing your startup is typically a good thing. However, the last thing you want to do is make a mistake on your return and lose out on money, or worse, get audited. Take it from me; pick up the phone and call an accountant.
Key takeaway: don’t be afraid to ask for help
Review all of your financial statement and documents
While you may not be a skilled accountant, it is important that you understand the financial side of your business. As an owner, there isn’t a penny that should be spent without you knowing about it. In order to properly prepare for the tax season, you need to understand your company’s in and out.
Apply those organizational skills, and review your financial statements and documents to ensure that nothing has slipped your gaze within the last year. One common issue with startups is that managers simply do not know how much money they are making versus how much they are spending.
This can confuse the IRS and when they become confused, they start handing out audits. Also, having a sound understanding of your finances makes your accountant’s job easier, as they’ll know exactly where to help you find potential tax deductions.
Key takeaway: know thy startup in and out
Communicate with the IRS
The IRS is not your enemy. In addition to ensuring that you pay your taxes, the IRS is also there to assist you through the tax preparation process, and that means answering any question you may have.
If you feel like you’re going to miss the April 15 deadline, don’t hesitate to call them up or file for an extension. Sometimes your success during tax season depends on how well you communicate. The IRS has trained professionals waiting by the phone, ready to assist you at a moment’s notice.
Key takeaway: don’t be shy when it comes to the IRS
It’s never too early to start prepping for tax season
Startups prepare and build for the future. Why can’t that methodology also apply to your tax preparation? As long as there is an Internal Revenue Service, there will always be a tax season waiting around the corner. Preparation is key to successfully filing your taxes.
While you may be in the midst of making sure everything is running smoothly for this year, it’s not too early to start planning for 2018, as well. Speak with your accountant about what you’ll need moving forward or where your business can potentially be a year from now.
Use the current tax season as a template for the next one, as well as a way to avoid some of the mistakes made this year. If this is your first tax season as a small business owner, then with a little preparation, next year will go by much more smoothly with a stronger likelihood of more profit.
Key takeaway: start prepping now!