Most people anticipate their annual tax preparation meeting as much as a visit with the executioner. Fortunately, it doesn’t need to be like that. With a little preparation not only can you turn that meeting into something that’s a lot more pleasant, but there’s a much better chance at ending that meeting with much better news than you would otherwise. This article will serve as a primer to making tax time a much more pleasant experience.
1. Get help. If the tax world offers one ray of hope, it’s the fact that there are lot of qualified people out there who can help you not only to prepare your taxes when the due dates roll around, but to advise you before the year starts, so you are prepared when tax season arrives.
The two people you can most trust with taxes are a Certified Public Accountant (CPAs) and an Enrolled Agent (EA). These professionals are two of three, the only other is an attorney, who can represent you in front of the IRS.
2. Watch out for deductions. Once you have a good idea of what is deductible, make sure you watch out for them in the normal course of business.
3. Keep a good tax diary. There are few things more frustrating than to keep receipts of your deductible expenses only to not remember what they are for when it comes tax time. Keep a dairy of your expenses, complete with receipts, so you can explain each one if you are asked.
4. Account for employees. Having employees changes the game significantly when it comes to taxes. Make sure you can account for everything when it comes time to fill out your tax forms.
5. Account for all of your business functions. There are many things that occur in the daily operation of a business that are deductible. You should make yourself aware of what those functions are and keep track of them when appropriate for your tax records.
6. Start preparing for tax time. You should begin the formal process of getting ready for your tax preparation appointment several months before the actual date. This prevents a lot of problems with trying to put everything together at the last minute.
7. Prepare for yourself. In the rush of making sure that your business is accounted for, many business owners forget to make sure their own salaries and expenses are kept up to date. Take all of your allowable deductions.
8. Keep a tax calendar. It would do you little good to keep track of expenses if you don’t report them on time. If you have to file throughout the year, make sure you remember to get everything to your preparer on time.
9. Make a list. Make sure you have everything before your appointment.
Hayley is a freelance blogger. For tax preparation in Los Angeles, she recommends the tax experts at Blue Tax.