When you think of the word taxes, many business owners want to pull their hair out. But preparing to get your tax return completed doesn’t need to be daunting. Whether you are an incorporated entrepreneur or self-employed, either way, you will have to pay taxes on your business earnings, so you might as well put your best foot forward.
The key to a successful tax season is efficiency. The less time you spend preparing for your taxes, the more time you spend working in your business.
Woman smiling looking at camera.
Jeff O’Brien
As tax season approaches, Alice Neuhauser, CFO at Seismic Capital Company, an early-stage startup investment firm, has put together a list of tips to help prepare you for tax season.
Alice shares these Top tips to help entrepreneurs prepare for tax season:
1. Stay on top of paperwork and maintain a system
It sounds simple, but it’s an incredibly common misstep for people. If you aren’t proactively working in an efficient system, you’re going to fall behind. Having a plan ensures that things aren’t missed and that everything is in its proper place. It makes paperwork easier over the course of the year by allowing you to work in smaller sections and makes the filing period significantly less stressful since all documents are where they should be, ready to go.
2. Be aware of varying deadlines
One of the more overwhelming parts of taxes for businesses is a large number of varying deadlines for different locations, industries, cities, etc. Make a schedule, digital or virtual, and hold yourself accountable for being aware of all the applicable deadlines so you can be prepared. Mapping out a defined timeline makes it easier to tackle each one by one, making it more manageable overall.
3. Budget time for things to go wrong
Even the most prepared can forget an essential piece of documentation or check the wrong box on a form. Companies must budget their time appropriately for taxes. Some may even need to rely on others’ timelines, as is the case with 1099s, which means you cannot wait until the last second.
4. Don’t put it off!
We all know small businesses and startups didn’t get into their industry to do their taxes, but putting it off will only hurt you in the long run. The quickest way out is through action, and if you’re sticking to a system, it makes the process less stressful and painful for everyone involved.
5. Don’t “not” do it
It may seem obvious, but it happens more often than you’d think. People keep meaning to get to it and end up pushing it off for far too long. When you wait until the last second, or even worse until you’ve missed a deadline, all it does is create more hassle and expense.
6. Don’t miss out on applicable tax credits
Ensure you’re taking advantage of all the tax credits your business or startup might be eligible for. Some are not available through filing; you may have to apply for them, so it’s essential to do your research on what is out there. Particularly with the pandemic hurting many small businesses and startups, it’s vital that those who need it get the credits they’re eligible for.
The bottom line is when you approach your taxes in an organized manner and prepare information to bring to your tax accountant; this makes the filing process easier on everyone involved. Take the stress out of this tax season by preparing in advance.
