Now that tax season has come to a close, you’re probably ready to take a load off and relax, but don’t get too comfortable! Now is the ideal time to start preparing for next year’s taxes. Remember that everything that you do this year impacts next year’s filings. By planning and strategizing now, you’re setting yourself up for smooth sailing. Here are some ways to make your 2020 tax season go off without a hitch.
Review your records
Get a good understanding of how your 2019 tax season went. Were there any specific challenges that you faced? Go back and take a look at your taxes and see what areas caused you the most issues. What can you do better moving forward to improve the process and the outcome? Set some time aside to consult with your tax CPA to see what changes you should make.
In the words of DJ Khaled, “Major key alert.” Maintaining accurate books and properly tracked records including, receipts, invoices, checks, credit card statements, and bank records, is essential to running a successful business. It also comes in handy during tax season. If you’ve been handling the books yourself and it’s been a hassle, consider outsourcing the task. Also, be sure to keep your personal and business expenses separate. Doing so will make for a smoother process when claiming deductions for business expenses that you’ve incurred or should you happen to get audited. Using platforms like Expensify in addition to a business bank account will keep things in order.
Familiarize yourself with changes to tax laws, deductions, and credits
Having a solid understanding of what and when new tax bills, deductions, and credits are going into effect or are no longer optional will give you some insight into how to maneuver when it comes to your business. A great example is the Tax Cuts and Jobs Act that went into effect in December 2017. This bill changed both individual and corporate taxes and would have impacted your filings for 2018. Whether you’re thinking about starting a business, restructuring, or analyzing your current setup, educating yourself on your options now will give you ample time to prepare.
Prepare for estimated taxes
Know your tax obligations. Depending on your business structure, you may be responsible for paying estimated taxes quarterly. Familiarize yourself with the due dates for each quarter and take the necessary steps to calculate how much you might owe.
Remember, tax season doesn’t have to be as stressful as people tend to make it. Think of your future self and how you can make your life much easier by getting your ducks in a row now. Tax laws change all the time, and so does your business. Having a trusted tax accountant and bookkeeper on your side will help keep things in order. Contact us to learn more about how we can make handling your finances year-round hassle free.