Organization, and the right tools, can save you a lot of time and grief when it's time to file your taxes.
Tax time usually sees businesses trying to get their affairs in order so they can file on time. With the ease of online tax filing and the ability to pay for tax consultancy and even enterprise-level accounting online, companies have a far easier time filing their taxes than in previous generations.
Despite this, businesses still end up in situations where they can only manage to file taxes a few days before they're due, or miss the deadlines entirely and end up having to pay penalties. Avoiding this requires organization: Putting systems in place to aid the creation of relevant documents improves a company's ability to file taxes quickly and correctly. After all, as with all items that hinge on information, the more you know, the better prepared you are to handle the challenge.
Most businesses have structures in place for preparing taxes. Some of them simply outsource the job, while others have internal auditing departments that help them get their taxes sorted out well before the deadline. To find out more about what works, we asked 16 professionals from the Young Entrepreneur Council (YEC) what companies should do to make filing taxes less of a strain for businesses.
1. Hire a bookkeeper.
"I can relate to first-time entrepreneurs and bootstrapped startups when it comes to saving money. However, if there is one item that you just can't cut corners with, it's proper support of financial management. The key early on is to hire a part-time professional bookkeeper. A bookkeeper will make sure you have monthly financials and will work with your accountant to file taxes." – Kristopher Brian Jones, LSEO.com
2. Start early.
"If you start taxes earlier, you're able to organize everything in time, and you're not rushing at the last minute. Give yourself more time by starting early this tax season so you can get all your paperwork in order without feeling rushed." – Syed Balkhi, WPBeginner
3. Talk to your accountant.
"Develop accounting procedures with the assistance of your accountant. If you have a solid framework for your accounting, it will make filing taxes at the end of the year much easier. Your accountant should be familiar with your company and be able to provide customized advice for business needs." – Matthew Podolsky, Florida Law Advisers, P.A.
4. Get organized.
"Don't wait until tax season to get organized. Talk with your accountant about what system would make their job easier and then apply that system all year long. The system chosen will work because they are an expert in this area. This leaves less work in your business during tax season, and you will be able to check in on how your business finances are doing throughout the year." – Diego Orjuela, Cables & Sensors
5. Be intentional about bookkeeping.
"Be intentional about bookkeeping and keeping your books clean year-round. That way you have accurate numbers that your CPA can easily access. Try quarterly tax reviews and internal audits so you are always 'almost ready' to file. A system can help you in many ways outside of taxes, from assessing subscription services to HR. Accounting and tax preparedness should be integral to your operations." – Matthew Capala, Alphametic
6. Keep everything accessible online.
"For receipts, make them accessible online where your accountant can easily compute and include them on deductions. Double-check tax codes every now and then. File earlier than usual to avoid cramming and problems that might arise in the future." – Daisy Jing, Banish
7. Have a cloud-based system.
"If you keep all your receipts and paperwork online, in cloud-based software, you'll be able to stay much more organized. This will help make sure that you can get to the information anywhere from your phone. When selecting a cloud-based software for your accounting, make sure you test the mobile app to find the one that's the most intuitive." – Blair Williams, MemberPress
8. Organize your receipts.
"I've seen many small businesses that throw all of their receipts into a box and when it's time to file taxes, it's a huge mess. Take the time to organize your receipts so you can easily keep track of your deductible expenses. All you need is a simple file folder with a label for each month of the year. Every time you get a receipt, put it into the folder for the corresponding month." – Thomas Griffin, OptinMonster
9. Scan your receipts.
"Receipts have a tendency to fade over time, even if you store them away from the sun. Because of this, I recommend making scans of all important receipts and saving them on your computer. Believe me, the last thing you want is to be audited because of a faded number on an old receipt." – Bryce Welker, Accounting Institute of Success
10. Use accounting software.
"Using intuitive accounting software like FreshBooks, Xero or Bench is incredibly helpful when tax time comes. The software keeps everything organized and minimizes the amount of time you need to spend. And you can create a login for your CPA, making it easy to share information." – Keith Shields, Designli
11. Know the type of taxes you need to pay.
"It's crucial to do your research about the type of business taxes you need to pay since it depends on your business specifically. There are business taxes for sole proprietors, partnerships, C corporations and more, for example. So when filing your taxes, make sure you're filing the appropriate ones." – Jared Atchison, WPForms
12. Use tax filing software.
"You can avoid having to fill out tedious paperwork for your small business by using tax filing software. Of course, it depends on your expertise and complexity level. You may need to hire someone so you don't run into legal trouble down the road." – Stephanie Wells, Formidable Forms
13. Create a filing system.
"Tax season is a stressful time of the year for business owners. If you want to make filing your taxes easy, create a system that allows you to keep track of all of your invoices, insurance information, bank deposits and any other important financial documentation. When you create an organized system, you'll have a much easier time getting your paperwork in order when it's time to file taxes." – John Turner, SeedProd LLC
14. Keep track of all deductible expenses.
"To make filing taxes easier, it's important to be organized and start early. This will save you a lot of time and stress, and you'll be able to have everything organized to keep track of all the deductible expenses. Also, you can adopt a tax software application that will save you and your company time and money in the long run." – Alfredo Atanacio, Uassist.ME
15. Look at home office expenses.
"When you're filing your taxes, make sure you include your home office expenses as a deductible. Everything from your house payment, to your internet, and even home office repairs can get you a deduction. Make sure you're using the right tax software so you can take advantage of this additional deduction, which will help you save money on your taxes and grow your business." – Chris Christoff, MonsterInsights
16. Don't miss the opportunity to save.
"Keep business expenses on a limited number of credit cards. The more consolidated your spending is, the easier it will be to compile everything for tax purposes. When you keep everything as close together as possible, you reduce the number of lost expenses that could be tax-deductible and thus could lose the opportunity to save as much on your tax bill as possible." – Jared Weitz, United Capital Source Inc.