How often do you hear yourself saying,
“I Wish I Could Make My Business Tax Prep Easier”?
Let’s face it, most business owners loathe managing their taxes. While we can’t eliminate all the pain, there are some things you can do to make it easier.
Here are three ways you can improve the tax preparation process.
Use Accounting Software
Some of the benefits of using an accounting software are:
- Sales and expenses are automatically tallied on a daily, weekly, monthly and yearly basis so that your net income can be determined for tax purposes
- Assets are tracked so that any new assets acquired during the year can be added to a depreciation schedule
- Liabilities are tracked so that any loans, payroll taxes, sales tax or accounts payables be easily determined
- 1099’s can be processed easily
As you can see, there are big benefits to be gained from effectively using some software.
Now, software is only as good as the data that goes into it, which brings us to the next item on our list…
Ensure Your Records Are Up-To-Date
This step requires some organizational skills since you need to gather the supporting statements for all bank accounts, credit cards and loans.
- Make sure all bank and credit card accounts have been reconciled
- Make sure all loans have been reconciled to the end of year statements. (This ensures that the appropriate interest expense has been recorded, which impacts your net income.)
- Verify your tax liabilities to make sure that you haven’t missed any weekly, bi-weekly, monthly, quarterly or annual tax deadlines. (Failure to do this could result in penalties and interest)
- Run a detailed listing of your accounts receivable and verify it matches what is showing on your balance sheet. (We want to make sure all client monies have been applied correctly and that the balances shown on the customer account are accurate)
- Run a detailed listing of your accounts payable and verify it matches what is showing on your balance sheet. (We want to make sure all vendor payments have been applied correctly and that the balances shown on the vendor account are accurate)
Partner With A Bookkeeper
If using accounting software and reconciling accounts have you flustered, we would like to recommend you partner with a bookkeeping firm. There are two ways that a bookkeeping firm can provide value.
First, if you haven’t already set up your business accounting software, then partnering with a reputable bookkeeping firm can help you get started and ensure that the setup of your books is done correctly from the start. Knowing the difference between balance sheet accounts and profit and loss accounts is critical, as well as understanding how the setup impacts any reporting information you want to retrieve from your system. This is one of the most important steps in your quest to make tax preparation easier.
If you have already setup the accounting software but have no idea how to ensure your records are up-to-date, a bookkeeping firm will take care of these tasks in a timely manner. This will save you time by allowing you to focus on growing your business and save you money by making sure you aren’t paying any late charges or penalties.
Having the best tax preparation strategy for 2019, will help eliminate the stress of compiling tax information to provide to your CPA. It will also eliminate the sticker shock when the tax return is completed, and you must write the check to the IRS. Best of all, it will allow you to be proactive instead of reactive in your tax planning. At KEM Business Solutions we are dedicated to helping you feel more in control of all aspects of your business.
If you have any questions or need our help, please give us a call at 407-598-0654. Or just send us an email to firstname.lastname@example.org.