Read the news and tax season sounds even more challenging than ever. The IRS is struggling with its own organizational issues, but business owners can do plenty of things to make the process run more smoothly and efficiently.
With this in mind, our tax experts have some tips for business owners that can help stave off confusion and save money, both this year and moving forward.
1. Dot your I’s and cross your T’s.
As we are now into February, make sure you’re closing out the books on last year promptly and thoroughly. Pay special attention to any depreciable assets: If you haven’t adjusted those entries, look to do that now.
2. Be methodical about your deductions and expenses.
Having careful documentation — on business mileage, in particular — will be important when you file. Remember, the IRS has a different way of reporting single vehicles used for business purposes versus a fleet.
3. Map out your deadlines.
Business returns are due on March 15, 2022. While you can file for an extension through September 15, that will only extend the process and will get you behind as you look to 2023. We recommend getting it all out of the way as early as possible.
4. Right now is never too early.
Facing down this year’s taxes seems like a big enough job when it’s right in front of you. But it’s also a good plan to consider your process and what you can learn for future filings. If you run into record-keeping problems while working on this year’s taxes, make note of them — and make changes that work throughout your business, to save your future selves a headache.
5. Build relationships that stand the test of time.
An ideal partnership between a business owner and a tax professional is one that lasts. Cultivating a stable, long-term relationship with the same accountant or firm cuts down on onboarding time, and staying familiar over the years can help both partners grow and support each other with care and specificity.
Finding the right match doesn’t have to be a mystery. One thing to look for: You should work with a tax preparer whose firm doesn’t have high turnover. And make sure the firm that helps you has the knowledge and sophistication to match the needs of a company of your size and complexity.
If you’re looking for one clear sign that an accounting firm has the right expertise for your tax needs, ask about the percentage of staff members who are CPAs. A higher ratio of CPAs suggests more knowledge of and experience with sophisticated tax issues.
And as you work with your tax preparer, do your part by supplying information in a timely manner, taking the time to explain the business, and treating the relationship as one that needs to work for everyone. Then everyone will succeed.