5 Quick Tips to Prepare for Your Tax Return
It’s that time of year. Small business owners and creative entrepreneurs cringe hearing the word: Tax Return. If you’re one of them, don’t sweat it, you’re not alone. A lot of small business owners don’t know where to begin. We were in the same situation, just a year ago, until we began to see the need to stay organized and be prepared before our return was due. This saved us many headaches and saved us even more on our tax return.
So, we decided to share the 5 quick tips we utilize to keep us on track to file our tax return on time and to be on top of all our bookkeeping leading up to our return.
Warning: this isn’t an easy task. It will take work and due diligence to keep on top of your finances before the end of the year. BUT you can do it! We're rooting for you.
5 Quick Tips to Prepare for your Tax Return
1. Hire a Professional Account
We get it, you're on a budget and want to save money; so you'd prefer NOT to hire an accountant. A lot of small business owners have those thoughts. However, setting aside a small amount each month will allow you to hire a professional accountant.
Investing in a professional accountant will lift stress and free up your time, to allow you to do the things you love- like RUNNING YOUR SMALL BUSINESS! As long as you update and review your bookkeeping monthly, sending over your tax return documents for the accountant to file your tax return will be a breeze.
2. Allocate Time to Update and Review Your Books- Weekly
As we mentioned before, it's very important to keep up-to-date with your bookkeeping throughout the year.
- Make sure you plan for major expenses. There are big yearly purchases business owners need to make, so factor that in.
- It's wise to keep personal and business finances separate. Mixing the two will only complicate your books and make it harder to organize your finances come the end of the year.
- If you don't remember anything else, make sure you SET ASIDE MONEY FOR TAXES. Recently we saw the The NY Times posted that "The House bill says that up to 30 percent of business income can be taxed at the lower 25 percent rate, with the rest at the personal income tax rate." So make sure to save money for your year-end taxes!
3. Keep Track of Receipts
Keeping track of receipts can be difficult. From purchases of coffee to Adobe Creative Cloud to the newest Pantone Color strips, and to your small business' rebrand, the receipts can pileup. We recommend finding a filing cabinet or a simple folder and save ALL of your receipts. These will be very beneficial as you collect and finalize all of your books and receipts at the end of the year. The accountant will love you if you have all of them filed and organized.
4. Track Mileage
Similar to keeping track of your receipts, make sure you keep track of your small business' mileage. You many not realize but your mileage can really add up over the year. Keep track of every mile you drive for your business. The mileage you drive to go see your accountant or the miles you drive to pickup your clients' printed photos, all of this is fair game. So, keep track of it all. We recommend using a simple excel spreadsheet to keep track.
5. Utilize an Online Bookkeeping Program
Above, we mentioned reviewing your books monthly, and there are many great resources to keep track of your books online. However, many of them cost you an arm in a leg. Yet, one of our favorites is WaveApp. We utilize this free bookkeeping service, because it has some amazing features, and did we mention- It’s FREE!
A few of our favorite features.
Link bank accounts to keep track of every expenditure. Saves you so much time with the automation!
- It allows you to save and download important review documents such as Sales Tax, Balance Sheet, General Ledger, and other important documents. For more details take a look for yourself!
- Our favorite feature: The WaveApp allows you to add a collaborator to your documents. This makes it easy peasy for a your accountant to review your completed documents and finish your tax return in no time!
- This free online bookkeeping application even allows you to conduct your payroll for a small fee. We hope you take a look, we have a feeling you'll LOVE it!
The above tips can seem like information overload or whelming, but we shared all that to assist you as you begin to prepare your tax returns. It takes time to prepare your financials, but with a slow and steady commitment throughout the year-it will be a more managable.
Oh and we can't forget one of our favorite resources we found! A few weeks back, Honeybook & Rising Tide Society shared an awesome tax and bookkeeping resource. This document includes tips on how you can succeed in your endeavors to be organized and ready for the Tax Season!.Take a look & good luck!
Do you have any specific tips you use to keep organized as you prepare for the tax season? We'd love to hear!
B&M Design Co is a boutique design studio from Dayton, OH. We design authentic brands for business owners to flourish. 🌿 We specialize in logo design, visual brand identity, web design and other design services. We know building a brand is not a simple task, so we want to extend an olive branch, a symbol of peace and victory to allow your brand to flourish.