Each year, when the calendar reaches the end of December, some small business owners go into a mini-panic, recognizing that tax time is right around the corner. If you’re totally unprepared for it, tax time can be a nightmare, but if you’ve been observing some good practices throughout the year, your accountant may not have much trouble in filing your taxes and keeping your current. Here are some recommendations on how to prepare for that all-important tax time, so you don’t have to dread it every year.

Preparing for tax time 

By taking the steps below, you should be well-prepared for tax time, which means you won’t have to dread it when it comes:

  • Get organized – throughout the calendar year, you should be organizing your expenses, invoices, and business statements so they’re all accessible and ready to support your tax claims 
  • Bank reconciliations – make sure all your banking transactions have corresponding entries in your accounting system. This should be done each month, so it’s not a mammoth task at the end of the year. 
  • Quarterly payments – if you’ve made quarterly payments this past year, these will need to be compared to your end-of-year statement. When your books are fully reconciled, you’ll have no trouble preparing year-end statements accurately. 
  • Prepare W9 documents – if you’ve done business with contractors in this tax year, you’ll need to prepare the mandatory W9 statements, provided that your contractors earned more than $600 from your business. 
  • Start early – it’s never a good idea to wait until tax season to contact your accountant. By getting an early start, you can be sure that you’ve allowed enough time to handle any issues that come up, and you can be sure of booking time with your accountant.  
Owe money on your taxes? 

Many small business owners find that at the end of a tax year, they owe the government money, and this just isn’t budgeted for. To cover this shortfall, you may want to apply for some kind of business loan that will keep you current with the federal, state, or local tax agencies. Contact us at My Commercial Capital if you’re in need of financial assistance to cover your tax responsibilities.