Tax Season in July?! How to stay organized year-round!
REBECCA WILCHER IS THE AMAZINGLY TALENTED, DC BASED, WEDDING AND PORTRAIT PHOTOGRAPHER BEHIND REBECCA WILCHER PHOTOGRAPHY . SHE'S A TOTAL OPTIMIST, LOVER OF LIFE, AND CAN'T GET ENOUGH OF PEOPLE, ROAD-TRIPS AND LOVE STORIES.
AHEAD, REBECCA SHARES HER INSIGHT ON WHY IT IS IMPORTANT TO BE PROACTIVE, NOT REACTIVE (YEAR-ROUND) WHEN IT COMES TO YOUR BUSINESS TAXES.
These two words will send a shiver down the spine of even the most seasoned entrepreneur. For several weeks in the dead of winter, business owners will find themselves swimming in tax forms and accounting documents, trying to make sense of the tax code and what it means for their business.
If just thinking about filing your taxes has you close to hyperventilating, we understand! But by making a plan and asking for help, we can all get through tax season after tax season together! The best thing to do is: Be Proactive, Not Reactive!
First, a RINGLET disclaimer: We’re not accountants, so we won’t try to tell you about what deductions you might be eligible for or what your legal requirements will be. But we are pretty fantastic at getting things organized to reduce stress for our clients. Need a game plan to tackle the mountain ahead? You’ve come to the right place!
1. Gather Your Team
Whether you do so regularly or only around this time of year, every business should work with a Certified Public Accountant (CPA) to make sure their tax filings follow federal, state, and local requirements. In addition to your accountant, you may also work with an internal or outside bookkeeper for your business’s day-to-day financial management.
Early January is the time to get your team together, make sure everyone has what they need, and set tasks and deadlines for each person.
Talk through what documents or information your accountant may be waiting for from your bookkeeper, what each of them needs from you, and set deadlines to have those items accomplished. Then set calendar reminders for those deadlines so you can follow up and make sure things are moving along on schedule.
2. Assemble Your Paperwork
In your tax team meeting, your accountant should be able to list what documents they’ll need from you in order to complete your tax filing. This will likely include last year’s tax return, payroll documents (form W-2) for all employees, documentation (Form 1099-MISC) for payments to any contractors or vendors, and records of any estimated taxes you’ve already made.
Your accountant will also need a record of all expenses—something you’ve likely tracked throughout the year through an accounting software like Freshbooks or Quickbooks. If you’ve been working with a bookkeeper throughout the year, they should be able to help you find or prepare this documentation for your accountant.
3. Get It Done Early!
We can’t stress this enough. The sooner you can get your taxes for the year filed and done, the better off you will be.
It’s likely that you aren’t your accountant’s only client, and most of their clients will be procrastinating until the last minute to get everything done. If you wait until late March or early April, you’ll be lucky to get so much as an email back from your accountant!
Getting ahead of schedule will not only minimize your stress as April 15th nears; it will also increase the chances that your accountant will have the time and brain space to comb through your books thoroughly for possible deductions, saving you money with the IRS.
4. Plan Ahead to Make Next Tax Season Even Easier
To some extent, unfortunately, the level of stress you feel this tax season will be tied to how you’ve managed your finances all year. If you’ve been consistently tracking income and expenses, kept all of your paperwork in line, and started the new year off ready to go, the process should be breezy. If you’re finding yourself saying “ten-ninety-what?” “W-who?” or just now looking for a business accountant, you’re likely in for a wild ride—for this year, at least.
That’s why there’s no time like the present to prepare for the future. As you’re going through the tax filing process this spring, keep a running list of what has been stressful this year that you’d like to avoid the next time around. Could working with a bookkeeper help you to keep your paperwork and expenses straight? Do you need a virtual assistant to keep the rest of the trains running while you focus on the business’s finances?
We love these apps to utilize organization for taxes year-round:
1. Quickbooks: I personally use Quick Books Self Employed as that one seems to be the best fit for my business. Through this app, I am able to link my cards, record, categorize expenses and attach receipts. It also automatically tracks milage and I categorize my trips every couple of days. Lastly, the app even estimates quarterly taxes, which I make sure I pay every quarter. This app was an absolute game changer for my business, in fact, my accountant could not believe just how organized I was this past tax season!
Some other ones include: MileIQ, Expensify and BizXpense.
Bottom line..... Tax season is a stressful time for every business owner. But if you plan ahead and ask for help, you can minimize the stress, accomplish what you need, and get back to growing the business you love.
Thanks Rebecca for you're awesome insight!