When you think of the word taxes, a lot of business owners want their hair to be pulled out. Preparing to finalize your tax return doesn’t have to be daunting, however. Whether you are a registered business owner or a self-employed person, you must pay taxes on your business profits so you may as well be doing your best.
The key to a successful tax season is efficiency. The less time you spend preparing your taxes, the more time you will spend working in your company.
Alice Neuhauser, CFO of the Seismic Capital Company
At the start of the tax season, Alice Neuhauser, CFO at Seismic Capital Company, an early-stage startup investment firm, put together a list of tips to help prepare you for the tax season.
Alice shares these top tips to help entrepreneurs prepare for tax season:
1. Stay up to date and maintain a system
It sounds simple, but it’s an incredibly common misstep for people. If you don’t work proactively in an efficient system, you will be left behind. A plan ensures that things are not overlooked and that everything is in its right place. This makes paperwork easier as the year progresses by allowing you to work in smaller chunks, and greatly reduces filing because all documents are where they should be and ready to use right out of the box.
2. Observe different deadlines
One of the most overwhelming parts of corporate taxes is having a large number of different deadlines for different locations, industries, cities, etc. Create a digital or virtual schedule and make yourself responsible for knowing all applicable deadlines so that you can be prepared . Assigning a defined timeline makes it easier to edit the individual timelines individually so that they can be better managed overall.
3. Budget time for something to go wrong
Even the best-prepared can forget important documentation or tick the wrong box on a form. Businesses need to spend their time appropriately on taxes. Some may even have to rely on others’ schedules, like the 1099s, which means you can’t wait until the last second.
4. Don’t postpone it!
We all know that small businesses and startups didn’t come into their industry to pay their taxes, but putting it off will only hurt you in the long run. The quickest way out is through action. When you stick to a system, the process becomes less stressful and painful for everyone involved.
5. Don’t do it
It may seem obvious, but it happens more often than you think. People still intend to get it and end up pushing it off for far too long. If you wait until the last second, or worse, miss a deadline, it just means more effort and expense.
6. Don’t miss out on the applicable tax credits
Make sure you take advantage of any tax credits your business or startup may be eligible for. Some are not available by filing; You may need to apply for them, so it is important that you do your research on what is out there. Especially with the pandemic affecting many small businesses and startups, it is important that those who need them get the credits they are eligible for.
The bottom line is when you approach your taxes in an organized manner and prepare information to submit to your tax advisor. This makes the registration process easier for everyone involved. Take the pressure off this tax season by preparing in advance.