Tax Season: A Survival Guide for Business Owners
Tax preparation used to have me fantasizing about rearranging my sock drawer. Now, it’s just not a big deal. In this blog post, I’ll share the handy tools that keep me in control of my business finances, so I can focus on expanding my business.
In this article, we will cover everything you need to know about tax season preparation. This includes tips to keep track of finances, popular accounting tools to speed up the process, and how to find creative tax deduction opportunities.
Keep Track of Finances
First off, have a good look at your accounting methods. If you’re not keeping track of your finances and tax-deductible expenses throughout the year, you will feel nauseous at tax time and you won’t claim all the deductions you’re entitled to. Every week, I set up a non-negotiable date with my transactions. I grab a beer, put on some music, and sort through that week’s income and expenses. Miss this date, and you won’t remember whether that faded receipt was personal or tax-deductible.
What makes this process so much simpler is a digital receipt app. Forget about boxes filled with crumpled receipts. Use an app to turn your receipts into cloud-based expense logs, which even integrate with your accounts. There are some great apps like Expensify, OneReceipt, and Shoeboxed. They also let you make notes for each receipt. I use this most for recording who my meal/entertainment expenses were with, and for what business purpose – in case of an audit. Go paper receipt-free, and feel the zen.
Accounting Software & Tools
One of the best tools you can get is a great accounting software program. Find one that suits the structure of your business. Make sure it automatically recognizes and files transactions, rather than requiring you to input details manually. If your software is cloud-based, you can approve the program’s automatic activity in a few clicks as you wait for your coffee. Don’t stick to the manual dinosaur you started out with. Check out innovative software like Xero and Quickbooks, and get your life back.
Get creative and explore the tax deduction possibilities. Know what you can legally claim, and then think outside the box. A friend of mine successfully claimed a year’s worth of wine as research and development for a wine board game. If you don’t have an accountant, I strongly advise getting one. By pointing out hidden, tax-deductible expenses, they can often pay for themselves. Hiring an outsourced accountant to handle your taxes is also a great way to make sure you stay on track.
If you travel by car for your business, you need to keep continuous logbook as evidence of business use. If that sounds time-consuming and boring, it is. But a whole host of apps like Expensify, BizXpenseTracker, and Shoeboxed come to the rescue, tracking your mileage with GPS. Mileage expense tracker apps help companies track mileage and expenses for taxes, reimbursements, and expense reports. These expense tracker apps quietly stack up the supporting material for your tax return’s deductible expenses, so you can just get in and drive.
In the End…
Lastly, play to your strengths. Your business will run better and you’ll save money if you focus on what you’re good at. So delegate out the accounting activity you struggle with and use that extra time to focus on what you’re good at. If tax forms have your head spinning, delegate the task to someone who’s an expert.
Think of this pre-tax time as an opportunity. If your methods aren’t working for you, use this time to set up an accounting routine, find those life-changing apps and software, and build the accounting team you need. You’ll have more time to do what you’re good at, you will claim more deductions and you’ll be back in the driving seat. Take charge this year and watch your business grow.