As tax season approaches, many business owners feel the stress and pressure of gathering documents, reviewing financials, and ensuring compliance with ever-changing tax regulations. As your CPA, I want to help you stay ahead of the game so that tax season becomes an opportunity to maximize savings and avoid unnecessary penalties rather than a time of stress.
Here’s a guide to help you prepare for tax season and make the most of your filing.
Start Early: Organize Your Financial Records
Procrastination is the enemy of tax season. Start preparing as early as possible by organizing your financial documents. Key records to gather include:
If you’re using accounting software like QuickBooks or Xero, make sure all transactions are accurately categorized. This will save you time and reduce the back-and-forth with your CPA.
Review Last Year’s Return
Take the time to review your business’s previous tax returns. This will help you understand what to expect this year and ensure you don’t miss any deductions or credits. It’s also helpful to compare financial performance year-over-year so you can anticipate any significant changes that could impact your taxes.
Maximize Deductions
One of the best ways to reduce your tax liability is by taking advantage of all possible deductions. Some commonly overlooked deductions include:
- Depreciation on assets like machinery, equipment, and vehicles
Be sure to keep detailed records to substantiate these deductions, as the IRS often scrutinizes them.
Understand Changes in Tax Law
Tax laws change regularly, and staying updated is crucial for accurate filings. Recent legislation, like the Tax Cuts and Jobs Act (TCJA) and its potential sunsetting, may impact your business. We are here to guide you through these changes and ensure your return complies with the latest rules.
For instance, the qualified business income (QBI) deduction is a significant benefit for many pass-through entities, but not all businesses qualify. Understanding the specifics of these rules will help you maximize the available tax benefits.
Contribute to Retirement Plans
Consider contributing to your business’s retirement plan if you haven’t already. Contributions to a SEP IRA, SIMPLE IRA, or 401(k) plan benefit you and your employees and provide potential tax advantages. You can deduct these amounts from your taxable income if you contribute before your filing deadline. There are deadlines for setting up these accounts, so it is crucial to start early.
Check Estimated Tax Payments
Businesses that do not withhold taxes (such as sole proprietors, partnerships, and S corporations) are usually required to make quarterly estimated tax payments. Check your records to ensure you’ve paid the correct amounts throughout the year. Underpaying can lead to penalties while overpaying ties up valuable cash flow. These will need to be included on your personal return, so gather copies of your receipts.
If your business income has fluctuated this year, we can help you adjust your payments for the following tax period.
Prepare for Audits and Documentation Requests
No one wants to face an audit, but being prepared is essential. Keep detailed records of all your income, expenses, and deductions, and retain them for at least three to seven years, depending on the complexity of your business. If you ever face one, proper documentation will make an audit much easier to navigate. We also offer audit protection to all our clients, including audit defense, notice responses, and identity protection.
Consult with Your CPA Regularly
As your trusted CPA, I’m here to help you make tax season as smooth as possible. Instead of only reaching out at the last minute, regular consultations throughout the year can help with strategic tax planning, cash flow management, and finding opportunities to reduce tax liability.
We can also work together to plan for next year. This might involve restructuring your business entity, adjusting payroll, or investing in tax-efficient opportunities that align with your long-term goals. We offer advisory and maintenance packages to make getting regular advice easy and affordable for businesses of all sizes.
File Early and Electronically
Finally, aim to file your taxes early to avoid the last-minute rush and reduce the risk of errors. Filing electronically speeds up the process, decreases the likelihood of mistakes, and processes refunds more quickly.
Don’t Forget About Your Taxes
As a business owner, your personal and business taxes are often closely intertwined. In addition to preparing your business return, it’s essential to ensure your taxes are also in order. Here are a few key areas to focus on:
Coordinating your personal and business taxes effectively can lead to significant savings, so having a holistic view of both sides is essential. By staying organized and working closely with your CPA, you can avoid surprises and maximize your tax advantages in every aspect of your finances.
Final Thoughts
Tax season doesn’t have to be a stressful time of year. With proper preparation and collaboration with your CPA, you can confidently approach it, ensuring your business remains compliant while maximizing tax savings.
If you haven’t already scheduled a meeting to discuss your tax preparation, now is the time! We’ll ensure everything is in place for a smooth and efficient filing process. Let’s make tax season work for your business, not against it.
Contact us today to schedule your tax planning session!
If you would like a personalized assesment, please contact us.
(904) 725-5832 • fordefirm.com
5150 Belfort Rd #300, Jacksonville, FL 32256
