Get Ready for Next Year's Tax Return Now
Small-business owners are probably thinking about paying their second quarter estimated taxes right about now, because they’re due on June 17.
While you’re at it, why not start getting ready for the next tax season? Planning ahead will make preparing and filing your 2013 income-tax return as painless as it can be.
Here are four steps you can take in that direction.
1. Evaluate your books. Is your current bookkeeping system is as efficient as you need it to be? Proper bookkeeping involves tracking revenue and expenses, cash outlays, inventory on hand, and what you spend on employees. Options range from paper ledgers and basic spreadsheets to software apps (like Intuit’s QuickBooks).
Whatever system you use, you should be able to glance at your records and answer to such questions as, Which customer has let 60 days go by without paying me? and How much am I spending to keep the lights on at the office? If you have to dig too deeply for that information — or are frustrated by your system — now is the time to make a change.
2. Stop the paper storm. Did the first step toward preparing your annual 2012 tax return involve dumping receipts out of a cardboard box and searching though drawers for 12 months of utility bills? Make filing your 2013 return easier by taming the paperwork — or going digital.
If you’re decidedly low-tech, sit down now and label file folders. Vow to put every paper receipt in its proper place for the rest of the year. If you’re a technophile, start saving scans or images of receipts and statements with apps like Shoeboxed, OfficeDrop, and Genius Scan. The IRS now accepts scans [PDF] as proper documentation in case of an audit.
3. Track your mileage. If you deduct mileage from your taxes, make this the year that you stop searching the glove compartment for a pen and the floor for fast-food napkins to jot down numbers. Mobile apps like aCar for Android, Trip Cubby for iOS, and TraveLog for Windows make it easy to enter and track mileage data on a smartphone.
4. Consider hiring expert help. Unless you are running your own accounting firm, tax prep may be best left to a professional. If you’ve been doing your own returns, consider how much time it took to organize and complete them this year — and whether or not those hours could be better spent on another aspect of the business. A CPA who specializes in small-business matters can interpret the tax code (including new developments) and become a year-round financial adviser.