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Tax Season: 8 Tips To Get You Ready For Next Year
  • 14 April 2016
  • Elvis Michael

Tax Season: 8 Tips To Get You Ready For Next Year

Let's face it; getting your yearly taxes completed can be stressful for individuals and small business owners alike. Although tax season is now over, next year can sneak up on you rather quickly, especially as your small business grows. Thankfully, there are several ways to prepare for next year and make filing your taxes a little bit easier. Here are eight tips to keep in mind:

1. Start early.

While you won't be able to log all tax information early, planning certain aspects ahead of time can help speed up the process when tax season finally rolls in. If you do your own taxes through software, installing it early in the year and logging expenses on a monthly basis could help expedite the filing process. Avoiding last-minute preparations also proves to be less overwhelming, especially in a hectic business environment.

2. Organize all tax documents.

Keep all documents in a secure compartment in your office or bring them home for safekeeping. If the bulk of your business takes place at home, use a dedicated file cabinet or purchase a small drawer that's exclusively for tax-related items, preferably one with a lock and key. Aside from guaranteeing peace of mind, this allows you to effortlessly access every document when it's finally time to file.

3. Keep careful records of deductible items.

Sometimes life gets overwhelming in the office, and it's easy to overlook deductibles to include when you file taxes. Moreover, because some businesses are structured differently, you may not necessarily depend on specialized business software. Whether such data is stored on a spreadsheet or through another financial program, keep every detail organized by item, category, and other attributes that pertain to your products and services.

4. Finalize charitable work.

Have you considered donating to charity but haven't quite gotten around to it? Doing it before the next tax season will allow you to claim it as a deduction when the time comes. Keep track of all charitable donations and get receipts if you are a frequent contributor — especially ones with a lower dollar amount — as these details can be easily overlooked.

5. Back up your data.

Getting ready for tax season includes regularly backing up your data. Human error and other unforeseen incidents can mean the difference between filing on time and filing for an extension. Use cloud services or alternate offline solutions while also keeping older backups in case of unexpected surprises.

6. Decide how to file.

If you plan on filing taxes yourself, it's a good idea to look into the most appropriate software early. Most tax applications do a pretty good job, but the learning curve and filing procedure varies. Familiarize yourself with every aspect of the software and ensure that it remains up-to-date before tax season arrives. Otherwise, work with a dependable professional if you feel unsure about taking on the task yourself. Asking friends and family who they use is a good place to start your search.

7. Hire an accountant.

Even if you have all your ducks in a row, hiring an accountant or outsourcing to an accounting service can consistently provide tax preparation tips and related business advice. Adding a proven, trusted accountant to your team can help you assess certain business aspects more effectively and tackle a wide range of financial decisions.

8. Calculate an early estimate.

Perform a rough calculation to see if you actually owe taxes. This is also a great way to get an idea of your company's current financial status, and is best done several months ahead, allowing you some time to prepare in the event that you have unexpected results. This enables you to plan accordingly and avoid having to filing an extension. You can also set up quarterly payments to the IRS if it eases the financial burden come tax season.

When it comes to preparing for next year's tax season, keep these eight tips in mind. Getting an early start will help your bottom line, enabling you to see where your finances stand and proving the opportunity to manage your tax information with ample time.

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