Are Your Business Books Ready for Tax Time?
From here, we can see the end of the year. As it approaches, it’s a good time to look at your business books and determine whether or not you’re ready for tax time.
Unfortunately, as I look at my own situation, I realize that I’m not as ready for tax time as I usually am by now. As a rule, I keep my accounting fairly well organized throughout the year. However, it’s been a big year for me and my business. My husband asked for a divorce, so my filing status changes.
Also, because he was a partner in my business, I had to dissolve one business and start a new one — at least on paper. I’ve got a shiny new EIN and a bunch of paperwork to send out to all of my clients. Not only that, but when I look at my business books, I have to be able to divide up what was made with the old business and what’s been made with the new business. It’s a bit of a mess, and, honestly, I’m a little scared to even look at the situation.
So, with only two months left in the year, I’m starting to get serious about what needs to be done with my business taxes. After all, I don’t want to be scrambling at the last minute.
Now is the Time to Start Getting Organized
If your business books are a mess, now is the time to start getting organized. When you begin earlier, you don’t have to try to do everything at once. You can work through the issues a little bit at a time. This is my plan. I can start working on my business books for half an hour each week to start getting things into shape.
This is especially important because I’m looking for a new accountant. While an accountant can help you stay organized, it’s a completely different thing to expect an accountant to organize your records for you. Sure, a good accountant can take care of that. However, it will probably cost you (and it should).
Look Ahead to The Rest of the Year
Once you get things sorted, it’s time to look ahead to the rest of the year. Pull up what you’ve already for the year, including business travel and business purchases. Also, look at your big changes. Not only did I have to put together a new business and prepare for a new filing status, but I also moved across the country with my son. The great thing about a move, is that it is an above-the-line deduction. While it doesn’t have much to do with my business books, it’s still part of my overall tax situation.
As you look ahead for the rest of the year and consider next year, think about what you want to happen and consider how you can reduce your tax liability. Your accountant or other tax professional can help you figure out strategies that work well with your business and with your life. While you still need to keep your business finances separate from your personal finances, you can still make sure that you coordinate between the two, especially at tax time.
If you haven’t started thinking about it for this year, it’s time for you to open the business books, look at your personal life changes, and put together a plan for increasing your tax efficiency.