4 Simple Things you can do to Prepare your Business for Tax Season

It might seem like you just finished filing last year’s taxes (and if you got an extension, then maybe you actually did!) but next tax season is already on the horizon. And while preparing to file might not be at the top of your priority list, getting a jump start will eliminate a lot of unnecessary stress when it comes time to submit your business tax return.

To help make your life easier, here are four things you can do right now to prepare your business for tax time.

1. Find a CPA
CPAs can ensure that you don’t miss out on any tax savings, and they’ll also give you tax planning advice specific to your business. They can also help you deal with any of the tougher tax problems that your business may face. Understandably, CPAs are in high demand during tax time, so put ‘Find a CPA’ on your tax-prep to do list and start working with one now rather than leave it to the last minute.

2. Get your bookkeeping up to speed
Bookkeeping is a time consuming, ongoing task, but it’s worse to deal with if you leave it all until the last minute. Getting your books in order now will reduce plenty of stress when it’s time to file your tax return.

Self-manage your books using bookkeeping software, outsource your bookkeeping entirely to an online bookkeeping service, or hire an in-house bookkeeper to manage your books for you.

If you’re on a tight budget you could even consider hiring a student (preferably one studying finance or accounting) to oversee your books for you, although you’ll need to be more involved with this method to make sure that everything is in order.

Whatever method you choose, make sure your books are up-to-date and in order well before it’s time to file your taxes. Bookkeepers get very busy close to tax time, so this is one tax task you’ll want to have under control well in advance.

3. Identify Personal vs. Business Use for Your Deductibles
Some deductible costs are used both for your business and for personal reasons. Examples of costs like these could include your home office, your vehicle, or your cell phone. These costs are deductible based on the percentage the item is used for business. For instance, if you only have one cell phone and it gets used for business and personal calls, you’ll only be able to deduct the percentage that it’s used for business. Calculating the percentage of your personal and business usage ahead of time will simplify the process when you submit the information to your CPA.

4. Collect Receipts and Expense Reimbursement Documents
Having a system for organizing receipts is one of the best ways to keep tax time from becoming overwhelming. Online services like Shoeboxed can help you stay organized and store your receipts digitally.

Pay extra attention to receipts for large purchases, and for any expenses that are ambiguous in nature. Dinners out with clients or entertainment expenses fall into this category. A good practice is to write the purpose of the purchase on the back of the receipt, and keep track of how it served your business.

If you have employees, you may have made expense reimbursements over the year. You’ll need to collect the receipts and a report that documents the reimbursements. The IRS  requires you to substantiate any expense over $75 by holding onto the receipt. However, it is recommended that you hold onto records for smaller business purchases as well. If you haven’t done so already, gather receipt stubs for quarterly tax payments that you made throughout the year.

Tax season is still a few months away, but if you get started on these tasks now your business will be prepared and eliminate a lot of the stress associated with tax time.

Cameron McCool is a writer, entrepreneur and content manager at Bench. He regularly contributes business and lifestyle advice for busy entrepreneurs to the Bench Blog and small business publications.