Waiting at the last minute to prepare your small business for the tax season could have serious consequences. Not only will you and your accountant be pressed to finish on time, there is the possibility that you do not have all the documentation needed to complete your business's returns. To avoid this, it is important to not commit these preparation mistakes that other small business owners made.
Mixing Your Personal and Business Finances
Of all the mistakes you could possibly make with your small business taxes, mixing your personal finances with those of the business might be the biggest. When your personal and business expenditures are mixed, separating them can take considerable time. You could also miss out deductions that could make a difference when it comes to your business's tax bill.
To prevent this, work with your accountant to develop a system to keep your expenses separate. There are several ideas you can incorporate in your system, such as marking all your receipts as business or personal as soon as you receive them.
Not Tracking Your Finances Throughout the Year
During the year, keeping up with your business's finances can be challenging. In the rush to keep up with your day-to-day operations, you might shove some of your bookkeeping obligations to the side. Unfortunately, this could lead to a jumble of your finances. The more tangled up your finances are, the more time it will take to straighten them out.
It is important that you make time throughout the year to track your finances. An accountant can help you find a software program that keeps up with many of the financial records that you will need at tax time. He or she can also schedule periodic evaluations of your business's finances to find organizational issues before they get out of hand.
Failing to Monitor Outside Payroll Activities
If you are relying on an outside payroll company, you cannot turn over complete responsibility for the payroll records to the company and not think about them again until tax time. Although many of the companies are reliable, you still must monitor how your payroll is being handled.
You want to be sure that the company is accurately calculating the withholding for your payroll and transferring the necessary funds to the U.S. Treasury Department. If you do not, you could be faced with a serious financial crisis at tax time.
An accountant, like Dale K. Cline, CPA PLLC, can help you identify other ways to stay on top of your business's taxes throughout the year.