Tax Season Got You Twisted

Tax Time is Coming!
Yes…it’s that time of year again…when filing taxes will be upon us. Some tips for making tax time a little easier on the nerves (maybe not the checkbook):

1. Have all your documentation organized. This is true whether you do them yourself, your accountant does them, or you take everything to a tax preparer. Please don’t take a years worth of receipts, sales invoices, cancelled checks, vendors bills, your shopping list, and your kids’ homework into your tax preparer in a bag, box, or any other device it will fit in. Your tax preparer has to sort through this, which raises the cost of your tax return. Also, your tax preparer is not necessarily an accountant and may overlook items that should be included in your return. At the minimum, sort your documents by type and organize them into separate files. Oh yeah….leave your shopping list and kids’ homework out of the mix.

2. Have a ballpark idea of how your business did for the year. As a business owner, you should have a ballpark idea of your revenue and expenses for the year, and from that can ballpark your net income (or loss). This is the figure your taxes are based upon, so if your tax preparer’s figure is vastly different from what you think it should be, question it. They may have missed something (see above).

3. Be realistic. If you are like most small business owners, you haven’t made any tax savings adjustments or decisions throughout the year. The difference between December 31 and January 1 is that on December 31, the bottom line is what it is, and there’s nothing you can do to change it. On January 1, you have a whole year to improve your bottom line. So, just expect that you’ll have to pay taxes.

4. Stay in communication with your financial advisor. Ideally, this should be a CPA, accountant, or bookkeeper. As I mentioned before, your tax preparer is not necessarily an accountant. And even if he/she is, by the time they are preparing taxes, they can only work with the data they have. A good accountant or bookkeeper can help you throughout the year to lower your tax liability. In fact, they will pay for themselves over the course of year.

If you are disorganized; haven’t got a firm financial picture, or do not have a financial advisor to consult with, contact Perfect Balance Bookkeeping today. Our Profit Expert will be delighted to help you.

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