4 Ways to Prepare For Tax Season Before It Really Starts
While some people may think it’s too early to start talking about tax season, I actually think January is a perfect time. This is especially true if you don’t have a team in place and will need to put in extra legwork before April.
The truth is there are several advantages to getting ahead of tax season. First, you have less to worry about and therefore experience less stress. Second, it allows you to be better organized. And third, you avoid the hoopla of all the procrastinators.
Truth be told my federal taxes are usually done between February and March. The last thing I want to do is procrastinate on them. Here are some ways to prepare for tax season before it actually starts.
Hire an accountant if you need one.
Here’s a little secret: The first time I hired an accountant was right before tax season got really intense. This was a few years ago when I was realizing I could no longer keep doing my accounting myself. I was also kind of terrified of filing my own taxes as a business owner (math has never been my forte).
If you are in this same predicament I was in, it may be time to hire an accountant. And if you’re planning on doing that in time for tax season, you need to hire them now. Otherwise, they will be up to their eyeballs in work and won’t be able to help you get everything organized.
Get your paperwork organized.
When you hire an accountant, the first thing they will likely have you do is get organized. This will look like scanning financial documents you have lying around in paper form.
Speaking as someone who did this a few years ago, it’s utterly time-consuming. That’s why you need to do it before tax season gets too crazy. The reality is you and your accountant are going to need these documents.
Find accounting software.
The next thing you can do to prepare for tax season is to find the right accounting software. This will look like different things to different people. If you hire an accountant, they may also have a preference and can guide you in the right direction.
In addition to finding the software, you have to take the time to actually set it up. Just as with scanning documents, this is also very time-consuming. It’s also information you’re going to need for filing taxes so it needs to get done as soon as possible.
Start collecting those tax documents.
During the next couple of months, you will likely be receiving multiple tax documents from clients. Your banking institutions may send you some as well but that’s another story.
If you have accounting software with data from the last couple of years, you may not need to do much with the actual physical document. This is because you should have been doing bookkeeping as you went along. However, if you are in the process of setting up your accounting software, you’ll need to use the information in the physical documents to help you set everything up.
While tax season can be incredibly stressful, it doesn’t have to be. If you get organized now, you’ll have everything you need to file early. You’ll also be able to get organized for the future by making sure you have the proper systems in place for bookkeeping throughout the year.