Tax season causes many entrepreneurs and business owners unnecessary anxiety due to fear of the unknown. But when you are prepared ahead of time and understand the process, tax season can be a breeze to flow through.
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Preparing for your business taxes may be more detailed than planning for personal taxes, and it requires you to consider more options. Be aware of the types of allowable business tax deductions that you can claim in order to reduce your taxes payable.
Related: How Will the Biden Tax Plan Affect Your Small Business?
This tax year has been unique in terms of the pandemic and government relief subsidies, so be sure to disclose all information to your tax accountant. You must report all income received in your business for tax purposes.
The Internal Revenue Services has put together a tax information page on its website to use for reference. Click on Tax Information for Businesses, and read more tips below.
1. Communicate with your tax accountant
Know which documents are expected and when the deadlines to receive everything are. Keep your accountant informed when there are changes in your life or business that would affect how your tax returns are approached.
2. Make a list and gather evidence into a folder
When you know which documents your accountant requires in order to complete your tax return, start collecting them evidence far in advance.
3. Give yourself plenty of time to meet deadlines
It never hurts to submit your information and documents required to your accountant earlier than the deadlines. This will allow you to have plenty of time and little stress about meeting deadlines, and if something unexpected arises, you still have plenty of time to meet deadlines.
4. Review your bookkeeping for the year and look for any errors
When you have your bookkeeper do a final review of your books and correct any errors, it will be helpful to your accountant and help keep the costs down as well. You need accurate and current books to submit to your tax accountant in order to file your taxes.
5. Review tax-saving strategies with your tax accountant
The return on investment (ROI) of working with your tax accountant is definitely in how your accountant helps you plan for tax-saving strategies using personal and business tax tips.
6. Plan for the next year ahead
Be proactive for 2021 and start collecting and storing the tax information that you will need for next year in a safe place. When you place important tax documents in a folder immediately, it is a huge time-saver for you at tax time next year. Being organized and prepared helps the process go much smoother. You will also receive your tax instalment schedule from your accountant that you will need to follow.
Related: 75 Items You May Be Able to Deduct from Your Taxes
The bottom line is for a tax season to run smoothly, preparation is key. It is important to pay attention to details and ensure you are submitting a truthful tax return. Having a good relationship with your accountant, with open communication, prevents the likelihood of misunderstandings and ensures the process runs smoothly.