Although tax season doesn’t officially kick off until January 31st, it is certainly beginning to loom large in the minds of business owners across the nation. As most accountants will happily tell you, now is the time to begin doing your tax planning and preparation. Getting ahead of your commitments now will leave you sitting prettily once filing deadlines begin arriving, saving you time, money, and a significant amount of hassle. I’ve compiled a list of four tips that can help your business do just this:
• Gather Pertinent Information/Check Books – This is a great time to ensure that your books have been kept accurately and are up-to-date for the past calendar year. Collecting the information now will give your tax preparer plenty of time to make sure that your records and documentation match up with the numbers reported in your return.
• Evaluate Cash Flow – Managing cash flow is definitely one of the trickiest aspects of successfully running a business. According to Dave Chase, partner at Advanced CFO Solutions, “82 percent of entrepreneurial businesses fail because of poor cash management.” Depending on the structure of your business, you may be in a position to consider deferring payment until the next tax year on some of your receivables, or you may instead need every available penny in liquid capital to meet your own expenses and obligations.
• Discuss Deductions – Work closely with your accountant or other tax professional to discuss all of the possible business tax deductions you may be able to take advantage of. In some cases this may mean investing in surplus office equipment and supplies. In other circumstances you can consider paying off bills early or making charitable contributions. The important thing is that you are guided through the process by a certified professional; making mistakes when it comes to deductions can be extremely costly.
• Review Administrative Compliance – Tax law changes each and every year; staying on top of your obligations regarding reporting is extremely important. The time running up to tax season is an excellent opportunity to take some time to review your regulatory compliance regarding new hires, independent contractors and other concerns. Your tax professional can advise you as to whether you are up to date in this regard.
While this guide is hardly comprehensive, it presents a good basis point from which business owners can begin preparing themselves for tax season. Remember to always consult with a certified tax professional prior to making any major changes to either your business or personal tax return.