With tax season upon us, are you starting to feel overwhelmed by the thought of preparing all the necessary documents and paperwork? You’re not alone! Many business owners procrastinate during this time of year because they’re nervous to see where their business stands at year-end, along with trying to figure out how they’re going to find the time to organize all the required information for their bookkeeper or accountant.
Here’s a few steps to take to help make this process more seamless and to reduce the anxiety business owners face at tax season.
Entrepreneurs already wear many hats while operating a business and being the bookkeeper or accountant shouldn’t be one. Be aware of your strengths and weaknesses, and outsource tasks that are not generating revenue to others in their respective fields. Hiring an accountant or bookkeeper to assist with your year-end will not only free up your time, but it will reduce the stress of managing things correctly and utilizing tax credits appropriately. Getting help at year-end will also enable you to review your books and get advice on how to move your business to the next level.
Are you the type of entrepreneur who keeps your receipts in a shoebox? Well, it is time to unpack that box and organize your receipts into categories based on type of expenses. You should not only focus on receipts but also organize accounts receivables, payables, payroll and bank statements. This will not only alleviate the embarrassment of dropping off a mess to your bookkeeper, but it will also reduce the bill you receive at the end of the process.
Are you in need of a new computer or vehicle? If so, this might be the time to purchase it. Capital assets can be considered an ongoing deductible expense, depending on their depreciation value. Capital assets are considered property or equipment that will benefit the business over a longer period of time. Capital cost allowance deductions allow you to deduct a calculated portion of the asset expense as a tax deduction and continue to do so over a period of years as the property or the equipment depreciates. Examples of these purchases include buildings, land, computers, vehicles and equipment.
Work with your bookkeeper or accountant to determine which expenses are eligible to be claimed as a tax deduction. Purchases must be reasonable to the business operations. Some general expenses include materials, supplies, equipment, rent, travel and training. Organize your receipts into categories to reduce the amount of time required from your bookkeeper.
Do you have a dedicated home office where you spend the majority of your time to complete business operations? Tax deductible costs associated to your home office could include office expenses, utilities, phone, internet, furniture, computers and much more. Work with your bookkeeper or accountant to evaluate your working environment and what costs or percentage of costs you can claim as a tax deduction.
Utilizing accounting software to keep up to date with record keeping will assist you in preparing for tax season. This technology can be used to track revenues, expenses and payroll that will not only assist at tax time, but it will also enable you to have an idea of your business profitability at any given moment. Switching to electronic statements can also save you time, especially if you reconcile transactions monthly to keep your records up to date.
Talk to other business owners to find references for local bookkeepers or accountants that can assist your business through this stressful period of the year. You can also check out your Chamber of Commerce business directory to find local firms that can support your business needs.
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