Toward the end of the year many people have holiday festivities on their minds. That stands to reason since, after all, it’s a busy season with many things to do.
But another season that follows closely behind that of the holidays is just about to begin as well. It’s generally one that people don’t look forward to nearly as much as the holidays, unfortunately. That season is tax season.
I can’t promise you’ll like tax season any more after reading this article. But I will share with you some reasons why entrepreneurs should work on taxes before the end of the year.
1. Saves Time
Working on your taxes may not be fun but it does have to be done. Whether you start now or wait until the day before they are due you have to file eventually. Putting off the inevitable simply doesn’t make any sense.
Beyond not making sense, when you work on taxes before the end of the year you can save time later.
Keep all of your business expenses and income neatly organized and easy to track. Once it’s time to finish up and actually file the task will be easy and fast.
2. Prepares You for How Much You May Owe
If you are a successful entrepreneur the amount you owe in taxes will likely not be just peanuts. When you work on taxes before the end of the year you will be more prepared for the possibility of a large tax liability.
By having an idea of how much you owe you can set aside more money if you have not saved enough already.
3. Allows You to Make Changes to Lower What You Owe
Working on your taxes before the year ends gives you yet another advantage for your business. It allows you to make changes that could lower your tax liability.
As an example, if you need to replace your business computer in the next six months should you buy it after January 1st or before? Have a somewhat close approximation of your tax bill can help answer that question.
If your tax bill is going to be high you may wish to purchase that computer now so you can deduction it for the current year. But if not, waiting until after January 1st can give you a deduction for next year instead.
You could also stock up on supplies or other needed items for your business, take some educational courses, and improve or add to other equipment.
4. Gives You Time to Seek Professional Tax Advice
Gathering all of your information and working on taxes during the holiday season may not be the most fun task. However, you could gain the time you need to ask questions of your tax preparer.
For instance, you can find out if contributing to a retirement account or charity is a good idea. You may also have time to ask about other deductions so you aren’t paying more taxes than you should be.
5. Permits You to File Sooner
When you have your ducks in a row you may be able to file your taxes sooner. Your tax preparer will appreciate your organization because it makes their job easier. In addition, the sooner you get your taxes filed the quicker you get a refund if you are owed one.
Working on taxes may not be your favorite thing to do. But clearly there are good reasons why entrepreneurs should work on taxes before the end of the year and cash in on savings in the process.