As the days are winding down at the end of the year, it may be tempting to relax and start planning for time off during the holidays. However, business owners should know by now that there is rarely time to relax when running their business. The end of the year is actually the perfect time to get busy and plan now to avoid tax headaches next year. We recommend three things to consider doing now to ease the burden come next April.
Incorporate Ways to Boost Accounting Efficiency
For most business owners, the most difficult part of doing taxes is preparing for them. Gathering receipts, calculating the cost of doing business and counting your profits takes up a lot of time. Losing or forgetting important documents that represent spending or profits can lead to mistakes on taxes and a big headache for you.
How can you streamline the process of preparing for taxes? By reconsidering how you conduct your administrative services and incorporating new ways to boost efficiency. For example, instead of writing paper checks and balancing your checkbook, switch to sending electronic checks straight from your bank account. Not only will this save you the price of a stamp, but it will also help you track all of your spending via your bank account in one place.
Purchasing an accounting program, such as Quickbooks, is another advantageous strategy that allows you to regularly update all of your financial information, spending and earning, in order to generate reports when filing your taxes.
Automate Your Payroll System
How do you pay your employees? If you do so manually, you are not only wasting valuable time, but you may make mistakes that can prove to be troublesome for you and your staff. To increase productivity and eliminate errors, invest in an automated payroll system which pays your employees through a computerized system.
A special payroll system will calculate wages based on employee agreements (hourly pay or salary) and generate paychecks as well arranging direct deposits.
The first tax benefit of an automated payroll system is that it is a safe place to store payroll records that doesn’t take up any space. Remember that the Internal Revenue Service (IRS) dictates that employment tax records must be kept for at least four years!
The second benefit of this system is that it makes it easy to accurately withhold necessary deductions, such as state income, social security and Medicare taxes. Utilizing the system’s hard-coded tax rates, you eliminate payroll tax errors come tax time.
Finally, the payroll system syncs with your accounting system to provide accurate reports whenever you need them.
Save for Business Taxes
The end of the year is the right time to approximate how much small business taxes you may be liable for. Print or create a profit and loss statement to reflect your financial situation; once you have this information, you can count how much taxes you may be responsible for.
This will help avoid unpleasant surprises come tax time, and will help you save the required amount to pay off the taxes. Remember that the IRS also offers convenient payment plans if you cannot pay the full amount by the due date.
If you need help affording a payroll and/ or accounting system or require financial assistance to pay off your business taxes, turn to IOU Financial. Our hassle-free small business loans of up to $300,000 can be in your bank account in under 48 hours! Contact us today!