"Those who do not learn history are doomed to repeat it.”
Every year, you pay your taxes. Every year, you wonder why you pay certain taxes. And every year, the process never becomes any more enjoyable. While you’re never going to welcome the action of giving the government your hard-earned money, here are several mistakes you can avoid to make the entire process less painful.
Waiting Until The Last Minute
Most tax deadlines are rigid, so don’t wait until the last minute to start. Just as you’d charge a customer extra for a quick turnaround on a project, so will your tax accountant.
Start the conversations with your accountant long before your returns are due (April 15th — or Sept. 15th for corporations and Oct. 15th for individuals, if you file for an extension). Know what inputs she or he will need, and when you'll expect to have them. Get on their good side and your tax accountant will be more likely to try to dig up some possible deductions to save you money.
Another thing you shouldn’t wait to do is remitting your estimated taxes. Individuals, sole proprietors, and S-corps filing at the individual level who expect to owe $1,000 or more in taxes need to be filing quarterly estimated taxes. The same goes for corporations expecting to owe $500 or more. Based on how much you owe, if you wait until filing time to pay the government, you’re more likely to be charged penalties and interest.
Having Your Tax Advisor Compile Your Financials
It’s important to have your financials in good shape when it comes time to file, so all your tax accountant needs to do is file them. However, if compiling your financials is cumbersome due to the poor shape they’re in, your tax accountant will likely charge a higher hourly rate just to clean them up. Your management financials must also be in good standing in order to make your tax accountant’s job easier (and cheaper). Work with an experienced bookkeeper every month to maintain your financials: This will help you analyze cash burn, calculate customer acquisition cost (CAC), and measure profitable revenue streams (to name a few benefits). Your tax accountant will be thrilled to receive airtight and reconciled financials come filing time, as opposed to having to do the heavy lifting themselves.
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Theresa Todman, Managing Partner/CEO of B&M Financial Management Services, LLC . Theresa specializes in bookkeeping, accounting, QuickBooks solutions, small business tax issues and consulting.