Winter is hibernation time for bears. It means snow days, hot chocolate, and ice-skating for kids. For small business owners, however, it’s the dress rehearsal for tax season. Although businesses that pay annually will not have to pay until the first few months of 2017, winter is the true season of tax prep. Filing taxes is time consuming, but if your books aren’t ready, it quickly becomes an all-consuming task. Since small business owners usually play several roles in their companies, this can spell trouble. So how can you prepare your books for winter and reduce your tax time stress? The solution is to plan ahead and play catch up.
Plan the Rest of the Year’s Spending
Obviously, no small business owner can predict every expense, but scheduling regular bills now will save a lot of time in the coming months. Whatever can be scheduled now should be scheduled. Although some major bills may need to wait until monthly funds come in, business owners can pay small bills ahead of time. Utility bills change with every billing cycle, so business owners cannot pay these in advance, either. However, even if you cannot actually pay these bills now, blocking out expected fees and determining how much is left in your bank account is crucial. Scheduling bills doesn’t just free future hours. It lets you know what to expect in the way of liquid funds come February.
Remember, the year’s biggest bill has yet to arrive. Those who pay annual taxes need to save for tax season. With luck, your deductibles will weigh in your favor, but a successful business usually pays at least some taxes. Saving money throughout the year based on monthly income is the best way to prepare for tax season. Not everyone can afford to save throughout the year, though. This just makes it even more important to examine your finances in the fall and early winter to make sure you have enough to cover what you owe.
A bit of math can let you know how much you will pay from each month’s income. If you haven’t already, review each month’s earnings and figure out how much money your tax bracket requires you to set aside. Adding these monthly sums will show your total yearly income taxes. Keep this in mind; you can deduct business costs when you fill out the paperwork. It’s always better to have too much set aside than too little, though. Professional bookkeeping services can help you keep track of these numbers, but you must be sure to set aside the money, or the most accurate numbers won’t matter.
Catch Up on Old Work
Everyone talks about spring cleaning, but unless your business involves frozen pipes and snow removal, it is likely to see less activity in the winter. Even businesses that see a spike in sales during the holiday season will likely see fewer sales during the rest of the winter. Take this opportunity to catch up on work you might have put off earlier in the year when your business was busier. Think of it as spring cleaning ahead of the crowd. Taxes are never fun for small business owners, but dealing with outdated records and incomplete spreadsheets at the same time is a recipe for disaster. At the very least, they turn a chore into a nightmare. Professional bookkeeping services and QuickBooks support can help you make it through crunch time, but the longer you wait, the more likely those services are to be booked. Using your business’s slow season to catch up on bookkeeping will help you make sure everything’s in order for tax season. It is an investment in your business and your health.
Catching up on bookkeeping is a great way to prepare for tax season, of course, but giving your books some tender, loving care is also an excellent development opportunity. Investing in QuickBooks training now can further prepare you and your business for tax season. While QuickBooks support is a great emergency remedy, QuickBooks training gives you skills you will continue to use indefinitely. Of course, QuickBooks support will always be there if you need it.
Seasons change, and businesses’ priorities shift. The closer we draw to tax time, the fewer resources are available, so it’s important to use the late fall and early winter to prepare. Taxes are fairly easy to predict for most small businesses with steady revenue. Going through the numbers will help you not only catch up, but get ahead. If you only have to add unexpected income or losses and finalize your estimates of future bills, you will have very little to do once the taxman comes. If you already have enough money put away to cover your dues, you’ll realize taxes are far less stressful than you anticipated.