One of the most satisfying things you can do as a business owner is to get ahead. Getting ahead of taxes might seem unlikely, however, with the right preparation it’s completely possible. Here are 3 things we recommend you do now to get ahead on next year’s business taxes.
- Understand What You Owe in Taxes.
You can know what you owe on your taxes by getting something called a tax projection. By knowing what you owe before tax season starts you can reduce the feelings of stress and anxiety that often accompany the tax season. Knowing your tax amount also allows you to spend and save smartly throughout the year, allowing you to do more with your money. You won’t accidentally overspend on your business expenses or make costly investments that will prevent you from having the money you need to pay the IRS when March rolls around. The opposite is also true, by knowing what you owe, you can invest in opportunities that you might have otherwise turned down or put on hold.
The best way to get a tax projection is through a tax professional, and it is best to get one as soon as possible in the year. Getting a tax strategy done by a tax professional can also be very helpful. The tax projection will tell you what you owe, and the tax strategy will tell you how to pay less tax. Armed with this information, you will be able to make the most of your resources to grow your business and still sleep soundly, knowing your tax bill is covered.
If you are tired of being surprised every year, give us a call for a free consultation! We would be happy to talk to you and learn more about your business. If you can’t afford a professional service and need to DIY your tax projection, there are calculators you can find online to estimate your tax payment, or if you are Excel savvy and understand tax brackets, you can create your own tax projection. The results you get from these methods will differ from your actual tax liability, but they can help you prepare for tax season.
**There are so many things that can affect your tax liability. For a quick and easy snapshot of what you may owe, take the amount of tax you paid last year, divide it by your income, add .05, and multiply that number by the amount of your expected income this year. Put this amount of money in a savings account for your taxes. While this will probably be nowhere close to your actual tax bill, you will at least have some money set aside so that tax season is not so stressful.
- Maintain Your Books.
One of the other most important things you should do to prepare for tax season is to maintain your business’ books. There is no time like the present, and everything you do from where you keep your receipts to what purchases are made on which credit cards can help or hurt you when it’s time for taxes. A great resource to help with maintaining your books is a bookkeeper.
By employing a professional bookkeeper to keep track of your business finances, you are helping your business to stay in an organized state. It is possible to keep your company’s book yourself, however, when bookkeeping is keeping you from taking advantage of business opportunities because you don’t have enough hours in the day – then your business might be ready for a dedicated bookkeeper. Having a bookkeeper frees up time, so you can spend it where it matters most; with your family, finding more customers, or enjoying your favorite hobby.
It is often nerve wracking to hand over an aspect of your business to someone else, but with a competent bookkeeper you can gain more control over your business and handle it more confidently than ever before! A qualified bookkeeper will help you to stay organized and prevent detrimental financial mistakes from occurring.
At Ascent CFO & Advisors we have a competent bookkeeping staff who will keep your books clean and organized. We’ll focus on the organizational aspects of your business so you can apply yourself to what’s most enjoyable to you. Additionally, we also provide a secure filing system for all your business documents that allows for easy access by you or other authorized team members.
An alternative to hiring a professional bookkeeper is to keep your books yourself, which is something anyone can do with training. There are many resources online that can give you the knowledge to maintain your books correctly, but the one we recommend is Nerd Enterprises’ Bulletproof Bookkeeping course.
- Learn the Tax Code.
Our last suggestion to you is to familiarize yourself with the tax code. When you understand things, you stress less about them. But taxes can be confusing! Unfamiliar words, similar looking forms, and daunting questions seem to manifest around March every year. And it doesn’t help that the tax code changes yearly, making a hard task even more difficult. So, every year business owners take the plunge and try their best to navigate the confusion. Well, we understand, and we don’t think taxes are fun either, however, we have the tools to help you see the light at the end of the tax tunnel.
One of the best tools is a competent Tax Strategist. They can guide you to make the best choices for your business and help you know you are spending your time doing what will make your next tax return simple. Meeting with a Tax Strategist can also help make your taxes less complicated because they can see where mistakes have been made or where important information has been missed. Mistakes and missed information can cause a lot of problems in taxes, so finding these things early in the year can save you a huge headache. And believe it or not, it’s easy to make innocent mistakes in your business finances. So, if you want peace of mind going into tax season, connect with us and allow us to make sure you are as prepared as possible.
But if you don’t feel like you need a Tax Strategist for your business right now the next best way to learn the tax code is to read it and books that can help you understand it. If you’d like our recommended reading list of books we’ve found helpful in understanding taxes and the tax code, send us a message at: interest@ascentacct.com
How you’ll benefit.
In this world there are few things that are considered priceless, however, if you can do these three things you will earn the priceless gift of peace of mind. As a business owner you have so much on your plate already, so imagine what you could do if you were given this priceless gift? If you can know what you owe, maintain your books, and learn the tax code, then not only will you be able to tackle your next tax season with greater confidence, but you’ll also be less likely to have to deal with the threat of the IRS or audits. So breathe easy knowing that you can do what you need to do to get ahead of next tax season.
