Prepare for preparation? Yes, it’s more than a good idea. It can have significant impact on your tax obligation.
You know how onerous tax preparation itself can be. So you probably don’t like to even think about it until those deadlines loom.
But some planning and preparation done throughout the year can make it easier to face the IRS’ intimidating tax forms. Here are five ways to minimize the stress and anxiety you usually feel in the spring.
- Use the technology available to you. That practically goes without saying. You could start a monster Excel spreadsheet based on the financial data you’re already capturing in QuickBooks, but this is time-consuming and clunky. Use targeted applications wherever possible. Shoeboxed, for example, helps you manage all of those paper receipts that pile up throughout the year. You simply mail all of your receipts to the company – or submit them electronically – and they’ll be scanned and ready for import into QuickBooks. If an app that you’re using lets you snap photos of receipts with your smartphone, take advantage of that option.
- Learn about the next year’s tax law changes early. As Congress makes changes to tax law throughout the year, information about the new IRS rules is readily available. We try to stay in touch with you about these modifications, but if you have a particular area of concern or want to find out how something you just heard might affect you, contact us.
- Use the reports available in QuickBooks. Some of these, like the Trial Balance and General Ledger, may be unfamiliar to you; they’re reports that we typically create and analyze for you. But there’s a handful of reports designed to help you keep up with your tax obligation as you go.
Figure 1: QuickBooks offers a few reports designed to help you keep an eye on your income tax obligation.
- Do a quarterly tax estimate – even if you don’t have to submit one. If you’re self-employed, of course, this is required. But even if you’re not, you’ll avoid those unpleasant, out-of-the-blue April surprises if you break your tax year down in increments and do some projecting early on. This will be especially critical as you near the end of the calendar year, so you can make needed adjustments to take advantage of deductions and credits.
- Consult with us periodically during the year. It’s an excellent idea to do what you can on your own. But we know how busy you are running your business. We’d be happy to either help you implement your own tax planning strategies or take a more active role throughout the year.