Tax season: the time of year when small businesses are overwhelmed with compiling records and submitting taxes before government deadlines and penalties take effect. Each year, many businesses start from scratch, scrambling to put the paperwork together to file their taxes. But tax season doesn’t have to be difficult. With a little forethought and organization, filing your taxes can be a simple, streamlined process.
This article will highlight 6 easy steps that any small business can follow to make tax season a breeze. These steps will not only help you file your taxes this year, but also lay the groundwork for future years, making the process easier over time.
Canadian businesses are required to file their taxes no later than six months after the end of each tax year. U.S.-based businesses have specific tax-related deadlines to meet according to their type of business and/or the state in which they operate. If you’re not sure about your deadlines, contact a professional and ensure you file on time to avoid penalties.
For owners focused on growing their business, staying on top of bookkeeping may seem overwhelming. Many small businesses have fluctuating incomes and revenue streams, and those ups and downs have only been amplified by the pandemic. Establishing processes to keep your bookkeeping on track throughout the year will dramatically lessen your workload at tax time.
This is another crucial step to help you prepare for tax season before it even begins. Consolidate all digital and paper records of payroll, expenses and receipts for your operations using a software application designed for small businesses. Establishing a records management process will set your business up for success each and every tax season, lessening the time you spend on compiling these records year-after-year.
Depending on your type of business or service, you’ll be eligible for various tax deductions, such as those outlined here for Canadian businesses and these U.S. business expenses. Can you deduct expenses associated with your home office? What about the money you spend on food and gas during business trips? If you don’t take the time to understand which of these deductions you can expense, you may be missing out on saving opportunities. Again, if you’re not sure whether or not you’re eligible for a business expense, contact a professional to help put your mind (and wallet) at ease.
If the pandemic created unforeseen financial stresses on your businesses, consider filing a Request for Tax Payer Relief form (if you’re in Canada), or taking advantage of various pandemic relief programs available to U.S.-based businesses. These programs can give you access to various tax credits and may also alleviate extra costs and interest fees from penalties associated with filing your taxes after the deadlines.
The reality is that some business owners simply don’t have the time to properly prepare and organize records in advance of tax deadlines. It’s hard enough running a successful business; tax season sometimes feels like taking on another full time job.
That’s where a good accountant and/or bookkeeper comes in. If you aren’t in a position to hire a full-time bookkeeper, Virtual Gurus offers a deep talent pool of bookkeeping virtual assistants. With a bookkeeping VA by your side, tax time will be a breeze. They can help you get everything organized for filling this year’s taxes, and also maintain bookkeeping processes all year long to set you up for smoother tax seasons in the future.