You hate January. You hate that the holidays are over. You hate the cold and snow. You hate airport delays, school closings, and power outages. You hate dark mornings and grey afternoons. Oh, and you hate paying taxes.
Every April, I file my tax returns. I hate that over 30% of my income goes to various governments. I hate writing big checks. I hate estimating payments for money I haven’t even made yet. I despise that I’ve already spent the money I made last year.
But I’m resigned. We know that taxes, like a galactic blockbuster movie, are an annual occurrence. (There’s no avoiding either.) I’ve learned to treat taxes like I treat any difficult business transaction: do them fast and get them over with as painlessly as possible. How can you prepare your small business for tax season?
During the year, don’t throw everything into a drawer, saying “I’ll worry about that later.” Come up with a file system and stick to it. Use an online document storage system like Citrix ShareFile and take just a few seconds to make sure invoices, receipts, agreements and other paperwork are scanned and stored in the appropriate folders. Integrate with Citrix RightSignature so that every time a quote, proposal or agreement is signed, it is stored automatically. Your accountant can easily, securely access the data and you save yourself the headache of chasing down paperwork from a year before.
Make one last big swing
You may be able to make one final retirement plan contribution for 2016. Employer contributions for 2016 to company 401(K) and other retirement plans aren’t due until April 15, 2017. If you have excess cash, you can still claim a deduction. Sure, it’s money you’re paying out but it is going to help your employees and some will be earmarked for your own retirement (assuming you don’t die of stress before you reach 59 ½ years old). Talk to your accountant about this one – this is pretty much the only move you can make after the year is over that still affects the prior year.
Take advantage of free time
Accountants call Q1 their “busy season” but the truth is, they don’t really get busy until February — most of their clients need the month of January to gather and send in all their paperwork! For most accountants, January is slow. Take an hour, meet with your accountant and review your most recent internal financial statements. Use this meeting to adjust your final estimated payment and plan tax moves for the coming year. Then make a date again to meet in May to track progress.
Grit your teeth. Sign the check. Then move on and run your business. Make sure you pay all estimated taxes. Don’t play games here — the house always wins.
Re-visit the IRS
Your taxes are likely your #1 business expense and you are determined to minimize them as much as possible. Open a new browser window and visit the IRS’ subscription site. The newsletters can be surprisingly helpful and the basic tax tips via can spur questions to ask your accountant. The smartest business owners I know do their best to understand the tax laws that affect them so they can actively engage with tax advisors.
These are five ways to make your tax filing season a little easier and to better position yourself for 2017. (Did I mention pouring a drink, too? I don’t want to leave that one out.)
Ready to start storing and sharing files securely for tax season? Give us a try for 30 days: