If you’ve just ventured out on your own to chase your entrepreneurial dreams, you could be in for a big surprise come tax season. While tax season isn’t fun for anyone, it can be extremely stressful for those running a business, especially if they are new to the world of business ownership.
Tax season is about more than crunching numbers. It’s a time to evaluate your business, make changes, get organized and learn from your success and failures. Here are just a few tips and tricks for surviving your first tax season as an entrepreneur.
Consult with the Experts
Even if you’ve historically handled your own taxes, make an exception this year. The requirements for business and personal claims are varied, and your type of business can directly impact how much you owe and what you can write off.
Work with an accountant to get a better understanding of what you need to have prepared, what aspects of your income you must pay taxes on, and which expenses you can claim. While the consultation might cost you money, it will pay for itself in the things you didn’t know you could claim and avoiding an audit down the road.
Organization and Storage
Speaking of audits, organization is paramount when tax season rolls around. When it comes to audits, it is best to expect the best but prepare for the worst. That means keeping all of your paperwork for up to ten years after the claim, depending on your business and location. The handy accountant you spoke with earlier can help you determine the right amount of time.
Storage often presents a problem for entrepreneurs, as space is limited. Consider renting space in a storage unit or renting a storage container to keep in your backyard. Cork’d storage containers in Dallas, Texas has had customers use their storage containers from anything from small garages to office space. Just be sure to put all your paperwork in waterproof, airtight containers to play it safe.
Take Notes
Take notes about challenges and successes you have throughout your first tax season so you can refer back in subsequent years. For example, if you realize too late that you should have put things into an easy-to-read Excel sheet each month, start implementing the process. If your accountant tells you about a claim option you hadn’t considered, note it for the upcoming year.
This process also allows you to keep track of questions and observations throughout the year that might apply at tax time. If you chat about taxes with a colleague at a barbeque in July, it might be hard to remember their advice about upcoming changes to small business tax credits the following year when the season rolls around again. Having notes in a centralized location will be a valuable resource for years to come.
Double and Triple Check Everything
Before you’re in the crux of things, make sure you have all the proper forms and details in place. If you have contractors, ensure they’ve all received their forms. If you have employees, make sure their details are up to date before you start processing paperwork. Make sure that nothing you need is missing (which will relate directly to your ability to organize).
If you have all the details attended to before the season begins, you’ll be laughing. The more organized and detail-oriented you are, the less stressful tax season will be. With everything ready to hand off to your accountant the only thing you’ll have to think about is what you’re going to do with the extra time and money you’ve earned by being ahead of the game.
