Tax time can be very stressful for small business owners. Sometimes it can feel like an endless process of rummaging for documents and piecing together a year-long puzzle. Make the decision to start the year right by devising a system of organization for the New Year. You will thank yourself later! Careful organization of your financial records will help you execute this process more accurately and efficiently. Before you meet with your accountant, have you ducks in a row. If you’re not sure about what records to keep and which ones you can discard, the I.R.S. has a huge amount of information for businesses on their website (www.irs.gov).
Maintaining complete, easy-to-read documents makes the process so much less stressful. Here are some tips to help you avoid stress during the tax season:
1. Document all incoming funds. Separate business and nonbusiness receipts as well as taxable and nontaxable income.
2. Track expenses. Find out exactly which type of expenses can be deducted and use that list to devise your system of recording these expenses.
3. Save supporting documents. Keep on file all papers that support income claims, expenses and deductions. This includes sales slips, purchase records, expense reports, travel records, paid bills and invoices, deposit slips and canceled checks.
4. Know what you’ve paid. Save all documents required to verify state and federal payroll taxes withheld from employees, as well as any taxes collected on sales.
5. Use clear systems of organization with documents that are clearly labeled and legible.
If you want to bring your tax preparation methods into the modern age, here are some inexpensive ways you can keep track of you expenses with an automated system:
One recommended program for ongoing record keeping is called “Outright.” This program has recently been taken over by GoDaddy. The starting package is $9.99 per month. Intuit QuickBooks also has an easy to use system that costs approximately $10 per month. Another amazing app is called “Shoeboxed.” This service is the same price and helps you keep track of every single receipt you receive throughout the year.