Question: What's one thing I should do when filing taxes for my business?
Be Meticulous About Retaining Documents
"In the bedlam of a startup, it's way too easy to receive a document and not do anything about it. It will save you (and your team) hundreds of hours in the future if you build a practice of saving documents in a central location for use in the future."
Interview Multiple Accountants
"I've had the same tax accountant for 15 years. From my experience, the key to finding the right accountant is to interview multiple firms and ask them key questions before selecting a winner. Make certain the accountant has experience working with entrepreneurs and small businesses. Ask for specific examples of how the accountant has helped other similar companies and ask for references."
Give Yourself a Quick Personal Audit
"At the end of the year, a lot of individuals and businesses simply pack up all of their documents and hand it off to their accountant. Instead, take a few minutes to look over where you money is coming in and going out. This way you have an even better understanding of your finances and where to save money in the coming months. It's not just about making money; it's about managing it, too."
Start Planning for Next Year
"Once you're at the point of filing, there's not much you can do to optimize your tax situation. As soon as this year's tax season is over, book an appointment with your CPA to talk about changes you can make in the current year. Being proactive makes a huge difference."
View Taxes as a Learning Opportunity
"Turn filing taxes into an opportunity to gain insight into your own business. Use it as a chance to review your numbers in a way that will help you learn and reevaluate. Filing taxes can actually be a learning experience if you approach it as something that can help you understand your business’ numbers and to see what is working and where there is room for improvement."
"If you're not working with an accountant that is familiar with all the deductions available, you may end up paying more than you need. It's important to work with an accountant who is up-to-date on all the new laws and deductions available. Make sure you take advantage of as many deductions as you can to reduce your tax bracket."
"As entrepreneurs, we create more work for our accountants by commingling business and personal funds. For instance, whenever we use credit cards and business banking accounts for personal expenses, it creates a potential issue with the IRS since certain personal expenses are not deductible for income tax purposes. Therefore, it's best to remove non-business stuff before filing your taxes."
Set Up Simple Systems
"Have an easy way to save all your receipts, invoices, transactions, etc. so you and your accountant have one place to find everything. We use Dropbox (cloud storage) to save and share files. We have a rule: "If it's not in Dropbox, it doesn't exist." Setting up simple systems early will save you a world of pain come tax time."
Have a Working Knowledge of Basic Tax Law
"All business owners should have a working knowledge of basic tax law so that you can ensure your tax responsibilities are being managed properly. Not all accountants have the same philosophies when it comes to paying taxes; make sure you and your accountant are on the same page, and make sure you are educated on the topic. Failure to understand this important aspect of business can cost you."