It seems like every business owner I know hates taxes.
And we’re not just talking about hating to pay taxes, we’re also talking about hating how long it takes to get everything ready each tax season.
I’ve even had some entrepreneurs tell me that in order to avoid dealing with quarterly taxes, they would rather pay penalties at the end of the year!
I’m here to tell you that preparing for tax season doesn’t have to be daunting and something you try to avoid.
Here are a few tips to help you streamline and systemize your tax preparation process so you can save time and headaches.
Please note, some of the links on this page might be affiliate links, meaning if you take action (ex. subscribe, make a purchase), I might earn a little something at no extra cost to you. Any recommendations I make for programs or tools are because I truly believe in them and have actual experience using them.
Use a Program or Tracker
Find a system, program, or spreadsheet that allows you to track income, expenses, mileage, donations, etc. There are several different options depending on the size of your business, the functions you need, and the amount you’d like to spend.
If you’re looking for something inexpensive, there are many free apps and low-cost tools that allow you to track different areas of your business.
For instance, a free PayPal account can send invoices and collect payments, and the free version the MileIQ app can track your miles for up to 40 drives per month (or you can upgrade to a paid plan for more tracked drives).
For a recurring monthly or annual fee, programs like Freshbooks (the one I use and love), Honeybooks, Quickbooks, etc., can track your income and expenses, send invoices and collect payments, and manage client projects.
You can pair any of these apps and programs with my Business Finance Tracker to make tax preparation even easier. It keeps ALL your business-related financials and product inventory in one simple-to-use spreadsheet, plus provides auto-calculating financial reports.
Streamline Your System
Once you decide on a system, make it quick and simple to access. The easier it is to access it, the more likely you’ll be to use it.
For programs you use online, like PayPal, MileIQ, or my Business Finance Tracker, bookmark the websites on your desktop and mobile browsers. If you have any apps on your phone, organize them into folders and make sure they are easy to find.
If you’re using a program like Freshbooks, Honeybooks, Quickbooks, etc., look into the available integrations. For instance, connecting your business bank accounts saves time when reconciling transactions versus having to import them or add them manually.
For receipts that are emailed to you on a regular basis, create a rule or filter in your email system so each email is automatically labeled and/or filed into a designated email folder.
If you want to automatically save attached receipts to a cloud storage area, create a Zap (an automated sequence of events) in Zapier that is triggered by the rule or filter you just created and saves attachments to the location of your choosing.
Reconcile Accounts on a Regular Basis
It’s easier to review your business transactions in smaller segments, such as on a monthly or quarterly basis. I recommend adding a recurring monthly or quarterly appointment to your calendar as a reminder to reconcile your business accounts.
While you may not feel like doing it each month, it takes far less time to review 30 days of transactions than it would to review 90 days worth. Plus, if there are any discrepancies, it will be easier to find and address them since less time has passed.
If you know monthly isn’t feasible for you, make sure to do it quarterly when you prepare your quarterly taxes.
Talk to Your Tax Professional
It’s essential to communicate with your tax professional on a regular basis, not just when you start a business or make a change in your business entity or income level.
For newer business owners, speak to your tax advisor for assistance selecting and setting up the right system, program, or tracker for your specific tax situation. This can save you time in the long run and may help you to minimize your liability and maximize your deductions.
Once your business is up and running, it’s good to check in with your tax professional on a quarterly or bi-annual basis so you can make adjustments as needed and avoid any end-of-the-year surprises.
While I can't promise that tax time will ever be something you look forward to, these tips, along with my Business Finance Tracker, can make it quicker and easier.
If you’d like help determining which program is right for you and getting it streamlined to fit your business processes, schedule a Discovery Call with me to get started.
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