Alright, tax season has come and gone, and it is now time to think about something besides paperwork and fiscal responsibilities. Or is it?
On one hand, it can be nice to take a break from taxes. On the other, now is the perfect time to jump right in and make sure that next year's forms and documents are filled out free of problems. In fact, taking the time to do so way before any deadlines can provide a major boost to any small business, as well as simplify the financial plan, budgeting, accounting and many other important duties.
With that in mind, focusing on taxes nearly one year in advance may be the smartest thing to do for a small business. So, here are four financial tips to make sure everything goes off without a hitch:
1. Don't forget in-depth bookkeeping
Entrepreneurs have their hands full. They've got to manage new employees, create business and ensure that the products and services are high quality. One thing that could then slip through the cracks is bookkeeping, but organization all of this data is one of the most important steps to an easy, hassle-free tax season. EY's James Markham, a guest contributor to Forbes, wrote that planning ahead and collecting every piece of information will make for fewer headaches. For example, make sure to gather all financial data as it happens. Accounting software programs can help, and clear organization will prevent any lost files or misplaced paperwork next April.
2. Pick a date to file
In some cases, startups don't have to file taxes based off of the fiscal year. Instead, the calendar year is very much an option, Markham noted. This can have its pros and cons, however. Going this route may be ideal for those who don't keep accurate records, don't have an annual accounting period or if IRS regulations require it. Choosing this option also means a small business will file outside of the busy season. That could lead to lower rates from tax professionals. Picking one option isn't the end of the discussion either. It is always possible to switch back, as long as it is done in a timely manner.
3. Create a good storage space
A small business is going to collect a whole lot of paperwork throughout the year. According to The Simple Dollar, finding the perfect place to store all of that paperwork can make next tax season much easier. For example, store W-2s, 1099s and the like in one folder and keep it alongside all other personal and professional documents. This way, they'll be simple to find months from now when they really matter. Too many people stash paperwork in confusing locations, making filing a complicated process full of running around and searching.
4. Don't forget about personal taxes
Entrepreneurs don't just have their company's taxes to worry about – they have to take their personal filings into account as well. The Simple Dollar explained that figuring out any changes to one's filing status as early as possible can remove any confusion when the deadline fast approaches. For instance, a business owner may have gotten divorced, married or had a child within the past year. All of these situations will drastically affect personal taxes. It may also be wise to have a conversation with the other people involved to make sure everybody is on the same page about any potential changes.
Above all else, an entrepreneur should talk with his or her tax advisor prior to making any significant changes. This way, they'll understand exactly how to best get ready for the next tax season and keep a financial plan on track.