Tax season is the time that most business owners dread. However, there’s no need for this to be a worrying period should you deal with your necessary contributions and income reporting in the correct manner. It’s now easier than ever to ensure your business is above board, and strangely, the idea of paying taxes can feel good. It feels as though you’re contributing, that you’re a business paying its fair share and justifying its way. To that extent, you can feel pride in your efforts. Of course, this is probably the best and most optimistic view of looking at your tax obligations, and they say taxes are eternal. If that’s the case, it’s best to be positive about something you cannot change.
To that extent, ensuring you’re always prepared when tax season comes around can help you tremendously. But this isn’t a one-and-done effort. It’s something you need to keep a mind to all year, from how you manage your books to how you report income and how you clear up any confusion you have. After few years of doing this as a business, you’ll start to understand the process.
But let us begin with the following advice:
Use Professional Software
There’s ‘having an idea’ of your finances, and knowing for sure that they are a certain way. Unlike marketing, this is not equal parts science or art, even though a heavily qualified accountant may look at a balance sheet and think of it as art, for your purpose, an objective understanding should be king. To this end, it’s very important to use professional software to keep everything above board. You achieve this through researching excellent accounting software. You should try and consider software that allows for the creation of time sheets, the ability to permit staff to prove their expenses, the ability to navigate through VAT and corporation tax, and yes, to calibrate your important self-assessment contributions.
Investment in something like this can often help you overcome the smaller issues that might plague a small firm – namely, when structuring departments, it can be easy to lose records, to fail to calculate all of your income or expenditure, and therefore to generate an incomplete balance sheet. It’s also easy to forget that not every single business owner will be proficient at calculations and keeping a watertight financial understanding. To this end, a little helper can go a long long way, so they can focus on what they actually do best. However, that’s not even the end of the story in itself. With the use of excellent accounting software, the various needs of a balance sheet, of tax calculation and tracking estimates and invoices will come to life, meaning that even someone unqualified can begin to become familiar with tracking and managing the lifeblood of a business – and that’s its cash flow.
Know Your Deadlines
Just like completing homework in school – it’s not the morning of the deadline day that is best for starting that work. In that respect, you should be preparing for your deadlines well ahead of time, and remember, it’s not just the end of the financial year in which you have to have everything ready. Different forms come at different times, depending on your country. For example, while it’s often known that mid-April is the end of tax season, it’s also the case that some employee tax might need to be filled in sooner. It’s also just worthwhile to have your forms ready and signed in triplicate (at least as a figure of speech,) viewed by your accountant and sent ahead of time. But of course, ensure that you aren’t too early, because you might start to encroach on a period of time in which you should be reporting your earnings, not cutting them off for the next financial year.
Still, you should regard this as an essential date to keep note of. It’s more important than your business ‘anniversary’ or whatever arbitrary celebrations you wish to apply – because this will help you stay above board and help you contribute your fair share.
Ensure Everything Matches With The Bank
The term ‘reconciling’ is an important one to know here. This is just an accountant’s label they use to ensure both your income and outflow reports match that evidenced in your banking activity. After all, your bank likely has the verified understanding of how you’ve been using your business funding, and if you ever get audited, this is partly what you will surrender for inspection.
To that extent, if your accounts are saying one thing and your business bank account is saying another, you likely have some miscalculation on your side. It’s important to keep solid hold of your bank statements and to try and stay above board regarding everything here. If you fail to do this, you will not have ‘reconciled’ the two statements you have. This can confuse you, and on top of that, it can look suspicious. It’s best to put the effort in now, and contact the bank if you feel your statement does not reflect the reality of your business activity.
Consider Going Paperless
Unfortunately, receipts, letters, balance sheets, they can all be misplaced should you only deal with those paper equivalents. Consider going paperless if you can. It only takes a moment to do ensure all of your reporting, such as bank statements, receipts, and document scanners all contribute to the same place. This way you can cloud backup all of your needed documentation. As mentioned before, certain software will also allow you to extract pertinent information from receipts, which can be perfect for remote workers on assignment who need to declare their expenses. Going paperless is a worthwhile task, because not only does it allow you to truly index everything, but when tax season comes around you have an easy means of segmenting relevant information within a time frame.
With these tips, you’re sure to remain routinely prepared whenever tax season comes around.