5 Tax Preparation Tips for Entrepreneurs

When tax season rolls around every year, many entrepreneurs are not looking forward to the amount of time, money and effort that tax preparation seems to involve every April. Being ready ahead of time can make the process go smoother and much more quickly. There are five tips that can help your proprietorship painlessly file your tax returns and leave you less chance of worrying about mistakes or audits.

  1. Find a Tax Professional

The most important tip for business owners is to invest in professional tax preparation. If you don’t already have an accountant working for you throughout the year, you should seek out recommendations for the right tax preparer. Instead of waiting until the last minute, you need to start looking early the previous year. Tax season can get busy, and the best accountants can easily get booked up, leaving you with the leftovers.

  1. Organize Materials

Before you start the process of filing your taxes, it is important to have a successful system of organization for all of your files and materials that are related to your venture’s finances. That means throughout the year, as expenses stack up, you need to make sure that everything is recorded and placed in an easy to review system. Avoid waiting until the last minute to do this, as it can cost your tax professional time and cost you money.

  1. Resolve Accounting

Looking through your books can give anyone a headache, so to make it smoother, it’s important to keep your accounting as accurate as possible. That means every time you make a purchase or a deposit, you want to make sure records and reality match up. A balanced checkbook makes things exponentially easier for you and your accountant during tax season.

  1. Process W9s

Before you continue to focus on your own personal and business obligations, you need to make sure employees and contractors are taken care of. That means that anyone who performed labor for your company and earned more than $600, needs to be issued a W9 form. This helps your freelancers get started on their own tax-filing journey and is one responsibility you can check off of your to-do list.

  1. Analyze Payments

Entrepreneurs who are on a consistent quarterly tax payment schedule need to review the amount paid throughout the year. A tax preparation professional can assist with this lengthy process. You want to make sure payments are appropriate for the size and scope of your business. If things aren’t matching up, it may be time to make adjustments.

Tax preparation doesn’t have to be scary this year. Focus on getting prepared, organized and efficient to make this April less stressful.