Every year several businesses are caught off guard by the pending tax season. It often feels like the last season has just ended, when the next one begins. As a direct result, a lot of businesses either spend several weeks scrabbling to gather things together for their accountant or needlessly waste money paying another individual to sort through the mass of paperwork. So how do you avoid this trap?
Develop a Strong Organizational System
The key to effective tax preparation is to set up an organization system at the beginning of January. Your organizational system should be unique to both your business and to the individual maintaining it. Set up a meeting in early January or if you are really proactive, in late December, with your accountant. During this meeting, have an informal discussion about the items, invoices, and receipts that you should be tracking on an annual basis. At the end of the meeting, take some time to decide what is the best way for you to track these items on a regular basis.
Make the System Work for You
Effective tax filing has to begin with a system that works for you. Ideally, you will use some of the terrific organizational features that are available through technology: quickly connecting all your systems together. But if you hate computers, even simple tools like an Excel spreadsheet and email reminders will be extremely ineffective. In this situation, you will need to develop a paper system or perhaps assign the tracking duty to another individual in your company.
Try to start your tax filing system at the beginning of the year and maintain it. When you maintain good records, you will save both you and your company time and money. Retain the hard copy of all receipts. Do not assume that something is unnecessary, your accountant is the expert and will help determine what is necessary to retain and what can be discarded.
Communicate Regularly with your Accountant
Maintain regular communication with your accountant to save you money in the long run, especially if you have any questions regarding expenses and tax legislations. Your accountant’s role is to save you time and money throughout the year, not only during tax time.
Tax preparation is always easier if you plan ahead. However, if this did not occur this year, don’t panic. A good accountant that is familiar with your industry will be able to effectively navigate your company through the mountain of paper work and help you stay on track for the next tax season.