It’s just about that time of the year again: Tax Season! Maybe you’ve been filling your tax information away neatly in color-coded file folders all year. Or maybe you scanned and saved your receipts and other documents on your computer where you can find them in a second. It’s the perfect time to pull out your receipts, grab your W-2s and dust off your old tax returns for some tax season preparation.
Keeping tax documents organized and stored safely can reduce the chances of identity theft and help your small business be prepared before the April 15th deadline. And, if you get organized now, you’ll be thankful next year when you don’t have to spend hours digging around for your receipts and other documents.
As local tax accountants in Denver, we have outlined the best ways to stay organized for the upcoming 2020 tax season.
1. Use an Accordion Folder to File Tax Documents
The first time you filed a tax return was a walk in the park. You probably had one W-2 from a high school gig and nothing else to report. Fast forward to your adult years, and you may get a stack of W-2s and 1099s for one year alone. That’s not to mention other tax forms from your investments, mortgage, rental property income…the list goes on and on.
Get an accordion folder and label each section with the year (ex: 2018, 2019, etc.) Then, place your tax returns from years past into the corresponding folder. When tax forms arrive in the mail, add them to the compartment for the current year. Once your taxes are filed, include a copy of your return in that folder as well. That way, if you need to reference past tax forms, you can quickly grab them.
2. Round up your receipts
Collecting relevant receipts now will save you from unnecessary headaches and frustrations later. Find a manila folder, empty shoebox, or document box. You’re going to store all of your receipts in this one container.
Next, empty out all of the receipts in your purse or wallet into the box. When you’re finished with that, walk around your home or office in search of receipts. Look both high and low, in drawers, on top of counters or desks, in piles of papers, and so on. Take whatever you find, and place them into your receipt box.
3. Find last year’s return
Last year’s return is a great starting point for this year’s filing. By looking at your return from last year, you can quickly see what information you probably need now. In addition, you may need to use some information from last year, such as depreciation or inventory information, to complete your new return.
4. Schedule tax preparation time into your calendar.
Schedule a time to do your taxes? Yup, you read that correctly. Scheduling tax preparation into your calendar not only mentally prepares you for the task to come, but ensures you’ll actually have the time to work on your taxes. That’s a much better option than waiting until the very last-minute, and trying to squeeze the task into a jam-packed schedule.
If you work with, or would rather have your taxes prepared by a qualified tax preparer, pick up the phone or send an email ASAP to schedule an appointment with a local tax accountant. You’ll be glad you did.
5. Decide who will prepare and file your taxes
If your business had major changes in 2019 your taxes will be more complicated. As a result, you might need to hire a CPA or other tax professional to prepare and file your taxes.
Just don’t wait until the calendar flips to April to make that decision because it could end up costing you. The average fee in 2018-2019 for a professional to prepare and file an itemized Form 1040 with Schedule C (for sole proprietors of a business) and a state tax return was a hefty $481, according to the National Society of Accountants.
Many tax professionals will charge more as the April 15 filing deadline closes in. Or you could find yourself scrambling to find someone who’s not too busy to help you
6. Make Tax Planning an Ongoing Activity
After the April whirlwind, it’s tempting to remove yourself from tax discussions. Before you know it, another year has passed and you’re back in the same position. Tax planning for business is not a once-a-year rush job; it’s an integral part of making important decisions and establishing a financially viable company. All of the tips above are designed to help you bring tax planning into your business strategy and minimize your stress come tax season—a result every business owner can appreciate.
The Bottom Line:
Very few small business owners specialize in tax preparation, and even those who do should not be devoting their time to taxes. An experienced and reliable accountant is one of the cornerstone team members of a successful company. Seeing as you don’t necessarily need to have your accountant on staff full time and can instead pay them solely for their services, there is no reason not to seek an expert to prepare your taxes and educate you on how best to align your business finances.
Small Business Tax Preparation & Assistance Services in Denver & Detroit
We help small businesses of all shapes and sizes with their tax returns. We are trusted by numerous small businesses and the number continues to grow day by day. Our team is run and directed by Certified Public Accountants (CPAs) which is the highest level of certification you can attain in accounting. We guarantee you are in good hands when it comes to tax and financial planning. Don’t trust your tax preparation with someone who is not certified! Schedule a Consultation with a Limitless small business tax accountant TODAY!