Setting Yourself Up for Success Before Tax Day 2020
If you are a small business owner, you have probably heard that the tax deadline was extended – if you haven’t filed yet, you now have until July 15th. For many of you, this is cause for a sigh of relief; a little more time to prepare is never a bad thing. Though Tax Day 2020 has been postponed, it’s still a good idea to file before the due date – you’ll save yourself the stress of a last-minute scramble, and if you’re due a refund you can get that money in your account as soon as possible.
The following pointers are part of a solid strategy to help you prepare your taxes not only this year but every year.
Track Down and Organize All Documentation
Keeping your documentation organized and accurate throughout the year is one of the most simple and ideal ways to not only set yourself up for success at tax time but to ensure your business is thriving throughout the year.
There are several systems that can help you maintain your records; you can do so either electronically or with hard copies of invoices, receipts, statements, etc. Keeping electronic, or digital, records are a safe and long-term storage solution and often recommended for easily transmitting information between parties as well.
QuickBooks is a popular and comprehensive bookkeeping software, but often an Excel spreadsheet is just as efficient for a smaller company. If you maintain your books throughout the year, you will know where your business is financially on a consistent basis, and you won’t have to deal with the stressful year-end scramble of pulling together a year’s worth of information all at once. A CPA is a helpful resource in deciding what option is best for your company.
Identify Write-Off Opportunities
Not every expenditure is 100% deductible – just one more reason to keep careful track of your records. For instance, expenses over $500 (ex. a new computer), may need to be “capitalized”, and written off over several years instead of as one large expense for the current year. Another example is charitable contributions – these are typically taken as a deduction at the personal level, not as a deduction from business income. And remember, entertainment expenses are no longer deductible at all.
There are also deductions for home office expenses that may be paid from your personal bank account and for miles driven for business purposes on your personal automobile. You might even be missing travel, meal, or other expenses that qualify as business expenses and should be claimed on your tax return. There is a wide range of tax deductions and credits; make sure you have a professional CPA or other competent advisors that can help you navigate them.
Make Sure You Have all Necessary Forms
If you just started your company in 2019 and are filing for the first time, are starting a new working relationship with a professional, or just want to be completely prepared – you’re going to want to make sure that you have all of your records, forms, licenses, and identifying business information (like your federal EIN) on hand. You will also need to check federal, state, and local websites to see which forms are required for your business.
Filing the necessary forms and documentation accurately and on a timely basis can help you avoid late fees and penalties.
File Early for Tax Day 2020
The earlier you’re able to file your taxes, the better — especially in light of the turbulent and uncertain time that we’re living in right now. It may take some extra time for the government to process and handle everything, so getting your tax returns filed not only on time, but early, can help you avoid delays and problems down the road.
Do you have questions about the new tax deadline or how to handle your 2019 taxes? Are you wondering how you could better streamline your processes throughout the year and save money when tax season rolls around next year? Taurus CPA Solutions is here to help. Give us a call at 410-465-4600.