“Life is what happens to you while you’re busy making other plans!” These are the famous true words of the late great John Lennon. Days indeed turn into weeks, weeks to months, and months to years. And before you realize, it is time to file your tax return – a chore that we look forward to, with as much enthusiasm, as a trip to the dentist. It seems as though both experiences have a hint of the “extraction” to them.
Whichever way you cut the mustard, preparing your tax return involves the collation of massive amounts of paperwork. There are no short-cuts; thus, you must ensure that the paperwork is readily available should you be one of the chosen ones who is audited by the IRS or other tax authorities.
Stories abound on more and more small businesses being audited by the tax authorities. This is not a trend that is going to reverse itself any time soon. Consequently, it is incumbent upon small business owners to make it easier on themselves as much as possible. Keep on top of things when it comes to gathering documentations that are used in the preparation of tax returns.
Similarly, taxation legislation has never been more complex. Even though you are willing and able to pay your fair share according to the law, you must be very wary, given the current economic climate, to be 110% sure of what you can and cannot claim.
Against that sobering background, here are some tips on preparing for the upcoming tax season:
Know Thy Enemy
OK, so chances are that you won’t be inviting your local revenue inspector over for dinner, but if you do everything according to the law, you have nothing to fear. The revenue website is actually a treasure trove of useful information including important deadline dates and other helpful information about your valid deductibles.
Don’t Leave it to the Last Minute
Easier said than done, but if you are aware of the fact that you will be filing an annual tax return and will require your receipts of deductions such as business expenses and charitable contributions, it is much easier to place them in designated folders during the year as you receive them. This will save you the time and headache of having to look for them when tax season comes around.
No doubt you keep your wage receipts, and if you own a business, you will have sales receipts as well. However, there are other sources of income such as stock dividends, capital gains, and interest income. Make a list of where you receive sources of income – bank account/s, mutual funds, employers, etc., and make sure that all these sources are accounted for – figuratively and literally.
Even if you do not prepare your own tax return, investing in some accounting software to help you keep track of your receipts and deductions can help save you time and money with your accountant. Remember, the less time they have to spend sorting through your papers, the less they should be willing to charge for their services.
Accountant or No Accountant?
As described earlier, lodging a tax return these days can be very apprehensive. Paying for an expert to do it can actually save you money because they are aware of all possible deductions that you are legally allowed to use and also those that you cannot. If you choose to have an accountant lodge your return, do your homework to make sure that you find a reputable one whom you can rely upon. Similarly, your accountant can provide valuable advice to a small business owner like you when required. Hence, it is really important to find the right accountant for your small business.
Tax season is a part of life with which we must contend. However, if it is in your thoughts year-round and if you act and plan accordingly, it does not have to be such a headache.
This article was written by Daniel on behalf of CogniView pdf-to-excel converter. We are happy to save you the time and the headache this tax-season!
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