Tips for Small Businesses to Success
The end of the calendar year is an important time for businesses of all sizes. It’s not only prime sales season for retailers with holiday promotions but also when businesses need to start organizing the year’s financial information for tax season.
Though the April 15 filing deadline may be months away, your company should be thinking about ways to make that period as easy as possible. We spoke with business and financial experts about what small business owners should be doing right now to prepare for tax season.
Automate your tax prep
In today’s world, there are countless programs, apps and services available to help make tax time less of a burden. Jonathan Barsade, CEO of sales tax solution company Exactor, advised looking into tools that allow you to automate any or all of the financial record-keeping process.
“Trying to stay on top of tax rules and rates and then … completing tax returns and filing them on time is a mind-boggling task, especially for small businesses that operate across multiple locations and do business across state lines,” Barsade told Business News Daily. “The way taxes should be dealt with in this modern age of technology is to automate the process. The earlier the business owner proceeds towards automation, the less time they will need to work in tax season, which means more time remaining to focus on your business.”
Richard Milam, office productivity expert and president and CEO of EnableSoft, an automation software company, advised taking a look at your current systems to see what can be updated and optimized between now and the end of the year.
“Get the tools you need … to get ahead of [the year-end rush] so you’re not playing defense,” Milam said. “Identify what systems need to be updated, so when it comes time to close the books, the data is in place and it’s clean. Make sure it’s been reviewed and is ready for audit — in any business, that interruption is costly.”
Review your business expenses
As every business owner knows, tax season means taking stock of the company’s income, expenses and deductions. To get ahead of this task, business owners should do this throughout the year, thus ensuring a smooth ride when it comes time to file taxes.
“The biggest part of preparing for taxes is what should already have been done — that is, keeping track of all business expenses throughout the year,” said Steve Gibson, director of online form builder JotForm. “If everything [has been] entered into your accounting system in a timely fashion, then the hardest part is done. If not, you need to set aside some time to gather and enter everything correctly.”
“Match purchase orders with invoices and shipping notices, and include the customer payment receipts,” added Evan Singer, general manager of small business loan application service SmartBiz. “File these together to make everything easy to locate, and give it to your accountant.”
Implementing a good filing system, whether digital or paper, is key to making sure you can easily locate and organize all of your business expenses, Singer said. He noted that cloud-based accounting software like QuickBooks Online and Xero are affordable options for small businesses looking to sync and track bank account activity, expenses and invoices.
Learn which tax law changes will affect you
Tax laws are constantly changing, and it’s wise to stay alert and up-to-date on changes that could affect your business. For example, Nicole Odeh, a tax and accounting expert for The Neat Company, a business software and services provider, reminded business owners that new reporting requirements for the Affordable Care Act have begun to take effect, and if your company offers health insurance, you’ll need to make sure you’re meeting those requirements.
“Additionally, although it does not affect this upcoming tax season, there have been some filing deadline changes for the following tax season, and this will be a huge change in thinking and planning for many small businesses,” Odeh said. “Calendar-year partnerships [those whose tax year ends on December 31] will be required to file by March 15, which is one month sooner than they are used to.”