Well, that's a wrap on tax season for 2023... how did it go for you this year? Even the most organized small business owners can feel overwhelmed with the prospect of filing taxes. If you're breathing a sigh of relief that this tax filing is over and done with, you're not alone.
Why is tax season so stressful?
As small business owners, there are several logical reasons that we tend to dread tax:
It's complex. Small business taxes can be complex, requiring a lot of time and effort to prepare and file correctly. Business owners must navigate tax laws, regulations, and deductions that can change year to year. This complexity can lead to confusion and anxiety for small business owners.
It's time-consuming. Filing taxes takes us away from our core business activities. Small business owners already have a lot on their plate, and adding tax preparation to the mix is just another thing to juggle.
It can be pricey. You may not have the financial resources to hire a dedicated tax professional or accountant to manage your business's taxes meaning you may have to prepare it yourself (which costs valuable time) and you may feel you lack the expertise or experience to navigate the process confidently.
There's a risk of penalties. When it comes to tax filing, small businesses face a greater risk of penalties for noncompliance with tax laws than individuals meaning doing it incorrectly can lead to fines, interest, and even legal action in some cases. This risk understandably adds to the stress and anxiety of tax season.
Getting Organized for Next Tax Season
At MegoMedia, we believe in helping business owner's save precious time and stress by optimizing their processes, and this can apply to tax organization, too. If you're looking to make tax season less daunting in 2024, don't wait until next winter to get your processes in place. Start now while it's fresh in your brain.
Here are several steps you can take now to get organized for next year's tax season:
Automate Your Expense Tracking:
Find an easy way to keep track of your expenses. Diligent tracking can be difficult and tedious, so make it as easy as possible for yourself.
Find a tracking software like QuickBooks to help you keep track of expenses,
Use phone apps to track your mileage
Link your bank and credit card accounts
Implementing digital receipt systems
Setting up automatic expense categorizations
Implementing these systems can streamline your expense tracking processes.
Understand the Laws & Regulations:
When it comes to taxes, it's important to understand how laws and regulations apply to your business. Take time to research these yourself to help you feel more confident that you're filing correctly or meet with your Certified Public Accountant (CPA) regularly to ensure you're following all of the rules. At MegoMedia, our preferred CPA is Boegeman Tax. Their team is extremely knowledgeable and we trust them to always do the best thing for our business.
Set up a Separate Business Account:
If you haven't already, open a separate business bank account to keep your personal finances separate from your business. This makes it so much easier to reconcile your statements when it comes time to file and helps with tracking expenses.
Keep Track of Employee Info:
Having employees adds another layer of complexity to filing taxes correctly. Keep all employee information in the same place and ensure that you collect and record it at time of hire. You don't want to have to track down this information at the last minute. This information will be necessary when it comes time to provide your employees with their W-2 forms.
Plan Ahead:
In some cases, you may need to pay estimated taxes throughout the year. Determine how much you should be setting aside each month so that you can avoid any penalties or interest for underpayment.
What will you do differently next time?
Staying organized is key to making tax season less of a burden to you while you're trying to run your business. Now that you've made it through another tax season, take the time now to get organized by automating your expense tracking, developing an understanding of the laws that apply to you, setting up a business account, keeping your employees information on hand and making a plan for success throughout the year.
If you need support optimizing your tax organizational systems or don't even know where to start, send us a message TODAY (don't wait) and we can help get your operation running smoothly.
How are you getting organized for your next filing? What are you going to do differently next year?
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