4 tax season success tips for small business owners.
Tax season can become quite the headache for small business owners without the right technology, tools, and advice.
By leveraging help from the right advisors, as well as cloud technology, you can make this busy time of year more manageable. Here are some top tips to help make tax season a breeze:
Tip #1: Plan for taxes proactively.
It’s never too early to start thinking about next year’s tax returns. Talk to your accountant about how you can budget for next year, use technology to stay better organized, and get back to what you do best - running your business.
“We try to push our clients to do forecasts, budgeting, be proactive and be forward thinking,” states Bruce Phillips, CPA of HPC Accounting and Taxes. “So, when you get advice in the summertime and in the fall, you can actually plan and do something about it before you get the tax bill.”
By leveraging real-time data from your cloud accounting software and advice from your accountant, you can fix many problems that may arise before the tax bill even arrives.
Tip #2: Take advantage of cloud-based accounting software.
With all of your data in one place in the cloud, tax calculation is much more simple. Using the right combination of cloud accounting software and integrated tools will save you time and money during tax season, and prevent reliance on spreadsheets or outdated software with old data.
Cloud-based software will do most of the work for you, and best of all, you can access it online from anywhere at any time – using a laptop or mobile device.
In addition, consider choosing e-filing and e-payment so you don’t have to print and fill out any forms by hand. Today, most states provide an e-filing option or require filers do so. These are just some of the technologies you can use to ease the burden of tax time.
Tip #3: Hire an accountant.
Many small business owners shy away from hiring a professional accountant because of the fees, but once you try it, you may find their services invaluable. Professional accountants can give you great tax advice, save you time from trying to figure it out yourself, and help you find surprising deductions.
Tip #4: Think about taxes throughout the year.
December is typically too late for small business owners to start thinking about their taxes. Small business owners should be thinking about their taxes year-round, rather than an early-year rush. Bruce recommends leveraging partnerships, like the one between Xero and PayPal, to stay on top of things.
“Taxes are one of the most significant expenses that a small business can have and yet they typically spend the least amount of time dealing with it,” Bruce says.“Using Xero and PayPal and getting accurate, timely financial information will actually give you up-to-date information all year long, so you can stay on top of and talk about your taxes before it’s too late.”
When your payments feed directly into your accounting software, you can keep your accounts in order by reconciling them on a regular basis, and ensure that your accounting information is up-to-date. Best of all, when your financial data is flowing into your accounting software, on one single ledger in the cloud, collaboration with your accountant is only a few clicks away.
For more tips to streamline your taxes, see related articles below.
PayPal and Xero do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.