4 Tax Preparation Tips to Follow
If you want to avoid the stress of the tax period, follow these four simple steps to prepare your business in advance.
Tax season is one of the most stressful periods for a business owner. With proper planning, however, you can change that.
Preparing to file your business tax return in advance is essential, 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 business owners and their accountants.
1. 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. Then, start organising your books to ensure you're prepared when the paperwork comes in.
Tax paperwork should be organised by category, and you can make copies of important documents received by post.
2. 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 unsure 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, remember 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.
3. Check Whether You Can Get Deductions and Credits
Small businesses may qualify for several 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.
4. Get Help
Tax season is very stressful for your bookkeepers and accounting team, assuming you have them on the payroll. Even if they've been doing great the whole year, they may need extra help now.
A smart business owner will keep their accounting staff from burning 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
Tax season is far from most business owners' 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.
The best course of action is preparing to avoid unnecessary stress.
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.