March is here, and soon will come the blossoms of spring. So lovely! Unfortunately, there are a few less savory arrivals also marked by spring, like tax day. Are you prepared?
As a small business owner, part of your responsibility as CEO and CFO is to ensure that you have accounted for and reported your organization’s income and tax liability accurately. Ideally, you have systems in place throughout the year to track your revenue and expenses.
If that is not the case, no need to panic. With proper preparation, you’ll be ready for April 15. But the time to start is now. Here are three tips to help you get there.
1. Find the Right Team
By now, you know the importance of support and outsourcing in your business. There is no way for you to manage everything alone. With significant recent changes to tax law, working with a tax accountant is a must. In addition, you’ll want a bookkeeper to help you prepare your documents.
The best strategy to find these critical team members if they are not already in place? Ask! Talk to other business owners in your network and ask who they know and trust. There is no stronger endorsement than the testimonial of someone who has worked successfully with a financial professional.
Once you have a few possibilities lined up, have some questions in mind to find out if the person is a good fit. Money can be intimidating, so be sure that you connect with someone who helps you feel relatively at ease and unafraid to ask questions.
One word of caution: we are deep in tax season, so you may find that you need to make more calls in order to find professionals with availability in their schedules. Stick with it, and know that the effort is worth it--when you’ve found the right people to work with, they will become integral members of your team.
2. Take the Time to Prep
Tax work revolves around documentation. If you have your books in order throughout the year, the less you will dread tax season.
Having a good bookkeeper will keep you organized year-round and make the handoff of documents to your tax accountant relatively seamless.
If you haven’t considered working with a bookkeeper for your business before, I highly recommend that you do so now. You won’t regret it. If you are hesitant to commit to the cost, understand that a good bookkeeper may ultimately save you money down the line. In my mind, it's an expense you can't afford not to invest in.
3. Keep Good Records
While there is work you should delegate as a business owner, keeping proper records throughout the year is a critical role for which you need to take responsibility. Teams members are important, and here you’ll find another great resource as well--technology.
There are apps that you can use that will help you track mileage. There are apps that will help you manage receipts (or, you can defend against). Find the tools that work for you and use them!
You’ll need to document all of the expenses relating to the functioning of your business, including recurring expenses like utility bills. You should also make a habit of documenting professional development workshops and conferences that you can claim as business-related expenses.
Apps are a great option due to their mobility. But be sure to invest in good accounting software for your business. A complete system has powerful functionality that will make every aspect of managing your finances easier and more organized.
There are many things that small business owners need to figure out on their own in order to run their businesses. Your taxes should not be one of those areas. With a complex and ever-changing tax code, the risks are too high. You’ve worked hard to build your business. By not working with a reputable professional, you can do harm to your organization for years down the line.
Getting the right financial team in place, keeping good records throughout the year and adequate preparation of your documents are solid practices to establish now that will serve you well through this tax season and beyond. What may seem like overwhelming tasks now will pay off in spades as the years progress.
Best of luck!