Business tax preparation is challenging, especially for entrepreneurs and small business owners that don’t use tax software nor have tax professionals to ensure filing accuracy. There are consequences for incorrect tax filing. For example, understating income will result in tax penalties. If word gets out, your brand reputation and credibility may be damaged. Worse still, if the company needs to pay costly regulatory fees, it may even result in business bankruptcy.
To prevent these risks, businesses must use accounting experts with sufficient tax preparation knowledge to get the tax preparation process done accurately. Additionally, companies need to provide their finance team with innovative technological tools like tax software as a service for efficient financial record-keeping activity.
Investing in software and accounting professionals helps businesses avoid costly legal errors and provides higher productivity by reducing time on tasks like computing annual expenses, mailing returns, and filling out forms.
4 Tips To Improve Your Tax Preparation Process
This article provides strategies for streamlining your company’s tax business preparation process.
1. Record All Organizational Expenses
Regularly monitoring your company’s expenses simplifies the tax preparation process because you won’t miss potential deductions that reduce your annual taxes. In addition to a smoother filing timeline, you help your team become fully aware of the financial health of your organization. As you continue to track these records, the decision-makers in your company can become more efficient in improving money management so you can cut costs and know when to spend on investments.
Accounting & tax sofware
A business expense recording app is one of the modern tools to help you accurately record all organizational expenses. When you use this technology, you’d need to store your paper receipts in a separate envelope and use dedicated filing folders to track different categories. Then, you should scan these original documents and keep duplicates of them inside a digital app so you can secure backups of your essential business receipts.
To streamline the financial recording process, you must find affordable professional tax software that can contribute to a more efficient workflow. This innovative technology will allow you to complete tax returns quickly without sacrificing accuracy and paying unnecessary fees. Most software providers offer their customers tax pro service and user assistance while enabling them to look up specific issues on a digital support forum.
2. Set Up A Separate Business Account
Another way to streamline the business tax preparation process is by setting up a separate business bank account. This strategy allows you to easily keep track of your organization’s transactions so you can have an accurate and updated bookkeeping process instead of sifting through months of financial statements. On the other hand, using your card for business fees makes it harder for you to distinguish between corporate and personal transactions on the bank statement.
After setting up your business account, you should merge it with your accounting software without worrying about importing your private subscriptions. While this process can help you streamline the tax preparation process, you must make sure that no errors are being made, so you must keep an eye on it. As you do so, you can accurately demonstrate your company’s financial position, which allows you to immediately apply for funding from a lender or a credit provider.
3. Pay For Quarterly Business Taxes
Every year, entrepreneurs and small business owners must create estimated quarterly tax payments of their organization’s earnings, which must be submitted to the internal revenue service (IRS). Keeping up with these financial records prevents your company from getting penalized by this national institution. As you continue to pay attention to these deadlines, you reduce the financial burden of paying your liabilities in bulk once you file your income taxes.
Paying quarterly estimated tax duties during the year will help you avoid issues during the tax period. This situation means that you’ll only spend most of your taxes whenever you receive your business income instead of paying by the end of the year, which can be a heavier load. As a result, you avoid receiving a surprise bill when filing returns and help you eliminate the high estimated tax penalty for paying too little taxes during the entire year.
To ensure you’ll pay quarterly business taxes, you must pay attention to crucial tax deadlines. These specific schedules include the fifteenth of April, June, September, and January of the following year. With that, you must use a digital calendar that allows you to remember and be mindful of these dates by sending you timely reminders to give you sufficient time to prepare.
4. Outsource Tax Preparation To An Accountant
If you own a startup business and do all the necessary tasks on your own, you may not have enough time to monitor your legal tax obligations. Instead of filing accurate business tax, you end up having an inefficient bookkeeping activity, which may result in costly regulatory expenses. For this reason, you need to consider delegating the tax preparation task to an accounting professional who can accurately monitor your taxes.
If you don’t have an accountant yet, you may need to outsource one that can successfully help you in filing business taxes. Rather than learning the advanced features of the digital accounting tool, you can leave the payroll and bookkeeping tasks to this expert, smoothly eliminating expensive errors. Additionally, you’ll gain practical recommendations on how to have a more cost-efficient process in running your company, saving you tons of money.
Additional benefits for using an Accountant
In addition to managing your business payroll and filing taxes, your accountant will:
- Help you identify potential investments that can yield valuable results
- Provide insights e.g. when to launch a new product, hire employees, or expand your existing operations
- Budgets and financial forecasting
Accounting professionals can help you get your small business in order and in a position to make the best decisions for its success as well as keep up with your annual taxes.
As a small business owner, you must stay ahead of your financial obligations to prevent yourself from paying expensive regulatory fees. Use accounting software and consider streamlining the tax preparation process by following these four tips to ensure the accuracy and success of the activity. In turn, you can ensure that you’re filing accurate statements on time while receiving proper support in managing your company’s expenses.