Tax season is upon us.
And while that statement may fill a lot of you with absolute dread, taxes are something that you have to handle as a business owner.
The truth is, tax time can be stressful if you put tax preparation off until the last minute. And by doing so, you’re likely missing out on tax benefits too.
The good news? It’s not too late to get organized for this tax season! And everything you do now will set you up to be even more organized and prepared for future years.
Getting clear on what you need and who you need help from will alleviate stress and help you plan for the financial impact of taxes on your business (and this applies to refunds AS WELL as having to pay).
In this blog, you’ll learn:
- The Importance of a Tax Process
- 3 Things You Can Do to Be Prepared for This Tax Season
- 3 Questions to Ask Your Accountant When Preparing Your Taxes
The Importance of a Tax Process
There are various types of taxes with different purposes and payment intervals. As the business owner, it’s your responsibility to understand these taxes or hire a professional to handle them for you. Failing to file or pay taxes on time can result in severe penalties. (Not a scare tactic, it’s just the truth. Which is why it’s important for you to get control of this process.)
By having a Tax Process in place, you can ensure that you’re going to be timely and compliant with tax filings and that you are maximizing all the tax benefits available to you. And you can feel more confident and empowered by doing so.
- Confirm that you know the taxes that you’re required to have filed as well as when they need to be paid to avoid violations and penalties. (your accountant can help with this…more on this a bit later)
- Create a recurring schedule for how often you review, file and correspond with your accountant. Typically quarterly is adequate, but your accountant can help you best determine this based on your individual needs.
That’s it. Once it’s broken down into what is actually needed, it doesn’t seem so overwhelming, right? So if that’s all there is to it, what does it look like to execute that process?
3 Things You Can Do to Be Prepared for This Tax Season
You know the saying, “The best time to plant a tree was 20 years ago. The second best time is now.” So, if you don’t have a process to stay organized so that tax prep is a breeze, it’s ok. Follow the steps below and use this filing season to get organized and create your Tax Process that will serve you for years to come!
- Gather the Financial Records You Need: This includes your income statements, expense reports, and receipts. Whether you have digital or physical records, know where and how to access them so that they are ready to be reviewed. (As you’re doing this, it’s a great time to create your system for how you’ll keep these up to date and organized so that they are ready to go when it’s tax time.)
- Know Your Tax Requirements: Familiarize yourself with the tax requirements for your business and make sure you’re aware of any tax deductions or credits that you are eligible for. (Your accountant can tell you this and this information should be something you all review in the future as a part of your regularly scheduled correspondence.)
- Meet with your Accountant: Leave yourself enough time after your return is prepared to meet with your accountant to review it before it gets filed. If you have questions, make sure you get them answered.
We highly recommend working with an accountant to prepare and file your taxes. And if you have a hard time staying organized, we recommend hiring a bookkeeper as well. The time you save, mistakes you can avoid and benefits you gain are well worth it. If you’re unsure of how to best work with your accountant, here are 3 important questions to ask below.
3 Questions to Ask Your Accountant When Preparing Your Taxes
- What deductions and credits am I eligible for? Ask them to review your business expenses and identify any deductions or credits that you may have missed. This can help you reduce your tax liability and potentially receive a larger refund.
- Can you review my record-keeping practices? Ask them to review your financial records to ensure that they are complete, accurate and organized. Ask for suggestions on any areas where you can improve to maximize tax benefits in the future.
- Are there any tax planning strategies that I should consider? Ask about any tax planning strategies that you can implement in advance of the tax season. This can help you reduce your tax liability and better prepare for the future.
Your accountant should help you navigate the tax process and provide valuable insight. If they aren’t doing that for you, it may be time to find a new one.
By creating and implementing a tax process, you can ease the stress of tax time, maximize your tax benefits and avoid mistakes.
At the end of the day, smart tax prep is all about keeping more of the money that you’re making. And Fitness Revolution helps gym owners do that every day. So if you want to learn how to increase your take-home pay (without getting more clients, opening a 2nd location or hiring more staff), then get a copy of The Take-Home Pay Multiplier.
