Last year over 377,628 company tax returns were filed, a significant percentage of those were for small businesses. Many people approach taxes as something to put off thinking about until absolutely necessary. Once they are finally done often the part of the brain that deals with taxes gets switched off until it needs to be engaged again next year. With a bit of thought and planning you can make next year’s taxes go much more smoothly.
There’s no grand secret to filing taxes in an easy and efficient manner, it’s just a simple matter of setting a system of organisation and sticking to it. An old shoe box, while compact and useful, is not the most effective system for holding your financial info in an easy-to-access manner.
Keep everything. I have a system where every week I empty the receipts out of my wallet (if necessary I write on them what they were for), then I file them in their respective files for the various financial entities I have, for example: trust, company, personal. When I receive any receipts/invoices I usually pay them straight away (or set the payment up on internet banking for when they are due) and then file them. I endeavour not to double handle anything, which saves time. Also because I file everything as I go, it only takes a few minutes. At the end of the financial year it’s very straight forward to prepare everything for my accountant. Also, if anything breaks or there is an issue with something it’s very easy for me to locate the appropriate receipt.
There are so many options available today to help make managing your accounts a lot easier. Most are cloud based and are linked to your internet banking so they are able to take information directly from your online bank statements which means a lot less manual data inputting is involved.
The more you leave things to do later, the bigger the pile and the higher the desire to bury your head in the sand. Keep your stress levels down by keeping on top of everything.
If you are aware of your finances it will enable you to know how much money you need to keep aside for your tax and means you don’t get any nasty surprises!
Study Last Year’s Taxes
The best thing you can do to make filing next year’s taxes easier is to study last year’s accounts and taxes. Think about what you can do to ensure next year’s process is easier. Ask your accountant for recommendations.
Meet with your accountant and see what you can do to improve how you manage tax. Often small tweaks can make a big difference. Talk to them about paying your tax on a monthly basis which may be easier for your cashflow.
The Bottom Line
Nobody wants to be thinking of taxes when they’ve just finished with them from the previous year. However, if you get serious about keeping organised records and are aware of your financial activity you’ll find that tax season becomes, if not exciting, at least bearable and easier to manage.