Tax season is one of the most stressful periods of the year for a business owner. With proper planning, however, you can change that.
It's essential to start preparing for the filing of your business tax return in advance so you have time to gather all relevant records.
Take a look at the following tax preparation tips that can make the upcoming tax season less stressful for both business owners and their accountants.
Organise Your Tax Paperwork
Before anything else, it may be a good idea to sort out any past years' documents, if you haven't already. Start organising your books to make sure that you're prepared when the paperwork starts to come in.
Tax paperwork should be organised by category and you may want to make copies of important documents received by post.
Categorise Your Business Expenses
Another time-saving tip is to start organising and categorising your business expenses weeks before the tax return due date.
You can claim most of your business expenses as tax deductions. But if you're not sure which expenses you can claim, check out the official guide on HMRC's website.
All business expenses must be sorted out and explained in detail. Finally, don't forget to itemise your expenses.
Alternatively, if you outsource your tax preparation, you will want to hold on to all your documents for when it's time for your accountant or accounting firm to prepare the tax return.
Check Whether You Can Get Deductions and Credits
Small businesses may qualify for a number of tax credits. However, don't wait till the last minute. Check in advance whether you're qualified for these credits.
Deductions reduce your taxable income and credits are even better, as they directly reduce the amount of tax owed. Your accountant or tax preparation software will have a list of tax deductions that apply to your business.
Tax season is very stressful for your bookkeepers and accounting team, assuming that you have them on the payroll. Even if they've been doing great the whole year, they may need some extra help now.
A smart business owner won't let his or her accounting staff burn out during the tax period. Ask them if they need help and if so, make sure to relieve the burden.
It's essential to get your tax done correctly and on time, which is less likely to happen if you try to save money on accounting staff during this hectic period.
Advance Prep Wins Out
For most business owners, tax season is far from the favourite time of the year. However, it's not an excuse for you to wait until the last moment to start preparing your tax return.
To avoid unnecessary stress, the best course of action is to prepare in advance.
It won't trouble you nearly as much if you're to find that something is missing, but that's only possible if you leave enough time to sort things out.