Tax season can be a particularly stressful time for a small business, especially for those not well versed in tax preparation. There is often a dramatic scramble to get everything organized and to get the books in order before heading to the accountant. Gathering receipts, balancing books, making sure your deductions are cataloged properly, avoiding audits and fees are all obstacles you may run into while trying to accurately prepare your own taxes. We know it’s tempting to want to “do it yourself”, but allowing a professional to get the job done can really make things easier for your business in the long run. In order to make your life easier and avoid making potentially costly mistakes, we have put together a list of ways a bookkeeper can help you out this tax season.
1. Avoiding Inconvenient Headaches
Many small business owners are not knowledgeable in tax codes and preparation, this is where a professional bookkeeper comes in. A bookkeeper will take the time to understand what your business needs and how they can help you streamline your processes. They are interested in making your small business as efficient as possible and giving you the time to focus on running your business, not doing taxes. They will ensure all your transactions are recorded properly and that nothing is missed or duplicated. Whether done monthly or quarterly, it is essential to produce an accurate and balanced sheet for your accountant at the end of the year. In fact, a number of tax pros won’t even take on clients that can’t maintain and deliver a balanced daily record of their transactions. A good bookkeeper will make working with an accountant much easier and prepare you for a successful tax season.
2. Taking Advantage of Deductions
Deductions are tax credits that businesses can receive to reduce the amount of taxes owed. As a small business owner, you are eligible for many different types of deductions every year. This is really great news during tax season because it reduces the amount of income that is subject to federal taxes. You save money! A bookkeeper will collate your financial records into itemized categories (such as utilities, office supplies, charitable contributions) and determine what deductions your business is eligible for. Some examples of these deductions are advertising, insurance, equipment rentals, internet, office rent, and you can even write off your bookkeeping expenses. Often small business owners mix their personal expenditures with their business ones and this disorganization leads to missed deductions and potential trouble if audited. As a small business, every little deduction can be important to helping you get the most out of your paycheck but they have to be accurate. Come tax season, a bookkeeper and CPA will work together to maximize your deductions and keep your business profitable.
3. Illuminating Your Business Strategy
Another way a bookkeeper can help your business at tax season is by providing strategic reporting. A bookkeeper can do many other things besides just balancing books. Many bookkeepers offer reporting services that evaluate your individual situation and then advise you on the best way to strategically handle your future finances. Having a regular bookkeeper, with in-depth background knowledge of your business’ financial information will lead to a better understanding of your company’s objectives and what will drive tomorrow’s performance. Annual reporting will give you a clearer picture of your business’ overall health going into the new year. This allows a bookkeeper to give you valuable insight on expansions or investments that you may be interested in pursuing during the next year. Bookkeepers can also provide more frequent weekly reports to help you make regularly scheduled sound business decisions.
So this tax season instead of worrying about every detail you may be doing wrong, hire a bookkeeper to handle your financial work. By hiring a bookkeeper you’re allowing yourself to concentrate on more important things, like running your business. You‘ll save your sanity, your money, and make better decisions about your business’ future by leaving the taxes to a professional.