If you’re one of the thousands of small business owners who procrastinate until the bitter end on your taxes, or you find yourself struggling year round to sort invoices, receipts and other valuable records, you’re not alone. Even though tax season is dreaded by many, it can be a good incentive for better organization throughout the year.
With a little strategy and planning, small business owners can get a jump on keeping their records organized all year, not only to reduce stress come tax season but also to keep their focus on what’s much more important – increasing productivity and maximizing profits.
Here are some tips from the Intuit PaymentNetwork (IPN) team and Mike D’Avolio, Intuit’s Senior Tax Analyst, for tax season and during the rest of the year that will help “de-clutter the e-clutter.”
Start fast, finish strong: Small business owners should maintain organized tax records throughout the year as a way to make tax preparation more efficient. This practice will drastically speed up the time it takes to get the return completed and also provides an easier, potentially cost-saving means to addressing an IRS inquiry about the return in the future.
So what does this mean exactly? According to the IRS, the following documents, whether paper or electronic, should be retained by the small business owner throughout the year:
After year-end, be sure to start collecting and organizing source documents (Form 1099s, etc.) from financial institutions, the government and others so you’re not rushing around later in the process. And for an added edge, begin planning ahead for next year’s estimated taxes by running projections of your income and expenses and looking at tax law changes to avoid unexpected curveballs when crunch time comes around. Keeping close track of these recommended documents combined with starting the process in advance will most certainly make tax season less painful.
Work smarter, not harder: Now that you know exactly what items to keep track of all year, you’ll need tools to help with organization. You no longer have to rely on file cabinets or shoeboxes – several well-designed (and often times, well-priced or even free) online programs have cropped up in the past couple of years that are designed specifically for this purpose. They will certainly save time and money by cutting down on clutter.
Small business owners who commit to stay organized year-round - and arm themselves with tools in which to do it - will see increased production. In turn, they will see dividends that pay out continually over time.
About the author:
Mimi Turner is an expert in Strategic Payment Initiatives at Intuit PaymentNetwork.
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