Tax Season Prep: Get Your Business Finances in Order

Don’t let tax season sneak up on you! Follow this guide to prepare your business finances for a smooth and stress-free filing.

Get a head start on tax season and avoid the last-minute scramble.

Tax season can be a stressful time for small business owners. But with a little planning and organization, it doesn’t have to be. By taking the time to get your business finances in order now, you can save yourself a lot of headaches (and potentially money!) come tax time.

1. Gather Your Financial Records

The first step is to gather all of your financial records for the year. This includes:

• Income statements and balance sheets: These documents provide an overview of your business’s financial performance.  
• Bank statements: These will show all of your business’s income and expenses.  
• Credit card statements: If you use credit cards for business expenses, be sure to gather those statements as well.
• Invoices and receipts: Keep all of your invoices and receipts for business expenses.  
• Payroll records: If you have employees, you’ll need to gather your payroll records.
• Expense reports: If you or your employees submit expense reports, be sure to gather those as well.

2. Organize Your Records

Once you have all of your records, it’s time to get them organized. This will make it much easier to find the information you need when you’re preparing your taxes.

• Create a filing system: You can use physical files, a digital filing system, or a combination of both.
• Categorize your expenses: This will help you track your deductions and ensure that you’re not missing any.  
• Use accounting software: Accounting software can help you automate many of the tasks involved in organizing your financial records.  

3. Review Your Chart of Accounts

Your chart of accounts is a list of all of your business’s financial accounts. It’s a good idea to review your chart of accounts periodically to make sure it’s still accurate and up-to-date.

• Make sure all of your accounts are properly categorized.
• Add any new accounts that you’ve opened during the year.
• Remove any accounts that you no longer use.

4. Reconcile Your Accounts

Reconciling your accounts means comparing your bank statements to your accounting records. This is an important step to ensure that your records are accurate.

• Do this monthly, or even more frequently if you have a lot of transactions.
• Use accounting software to help you automate the reconciliation process.

5. Prepare Your Tax Documents

Once you have all of your records organized and reconciled, you can start preparing your tax documents.

• Gather your tax forms. You can find the forms you need on the IRS website.
• Follow the instructions carefully.
• Use tax software to help you prepare your return.

6. File Your Taxes

Once your tax documents are prepared, you can file them electronically or by mail.

• File electronically for faster processing.
• If you file by mail, be sure to send your return to the correct address.

7. Keep Good Records

It’s important to keep good records throughout the year, not just during tax season. This will make it much easier to prepare your taxes next year.

• Keep all of your receipts and invoices.
• Use accounting software to track your income and expenses.
• Back up your records regularly.

Tips for a Stress-Free Tax Season

• Start early. Don’t wait until the last minute to get your finances in order.
• Get organized. Create a system for tracking your income and expenses.
• Use accounting software. This can help you automate many of the tasks involved in tax preparation.
• Hire a professional. If you’re not comfortable preparing your own taxes, consider hiring a professional.
• Don’t forget to file. The deadline to file your taxes is April 15th for individuals and sole proprietors.

By following these tips, you can make tax season a breeze.

Need help getting your business finances in order for tax season? Contact Tied Out Bookkeeping & Tax Service today for a free consultation.