Three Tax Habits You Should Start Now

I see businesses in a frantic rush to file their taxes on time every year.
 
Business owners think they are prepared for tax season but often come right down to the wire. The accountant will send them home with homework they weren’t expecting.
 
The key to improve your tax filing experience is to prepare throughout the entire year. It’s important to develop good habits now so that you can collect the rewards at the end of the year.

Here are three simple tips to improve your tax experience and save you a couple dollars:

1. Avoid using cash.

The goal is to increase your expense line to lower your taxable income.
Using cash for business purchases can lead to forgotten expenses which are deductible. Little purchases here and there add up over the year.
You will also create more work for yourself. There are several steps to using cash for purchases.

1. Remember to ask for the receipt
2. Remember to write the expense on the receipt
3. Remember that you need to store the receipt for later
4. Finally, record the expense

 
You can save time and avoid any potential error by doing one thing: only use business debit or credit cards.
 
By only using business cards you’ll create a powerful paper trail. You, or your bookkeeper, will only need to look at your bank statements to reconcile your accounts. There’s no need to dig out your shoebox filled with receipts.
 
2. Say goodbye to your clunky systems.
 
If you found that gathering last year’s information for filing taxes took too much time, you’re right.
 
More times than not, business owners have a pile of receipts, invoices, and documentation which take too much time to sort.
 
There’s a better way.
 
I mentioned before that it all begins with a paperless and more organized approach. 
 
Look to the cloud. It’s time to put a system in place that is comprehensive and supports your business.
 
There is online-based software which will handle invoicing, payroll, data entry, and even allow you to upload documents. Some examples include Xero, Quickbooks, Simply Accounting. Try a google search for “best cloud-based accounting software”. Learn what’s out there and what would compliment your business model.
 
3. Quit procrastinating.
 
Putting off your accounting until the last minute will provide you with more stress. You’ll be down to the wire every time if you procrastinate. You’ll lose sleep at night hoping that you’ll meet that deadline.
 
Think about it, the only time accounting is time-sensitive is when it becomes a borderline emergency.
 
It’s time to rethink your approach to accounting.
 
Preventing next year’s tax season fire drill is a result of consistent record keeping.
 
Take the time to reconcile your cash accounts even though it’s annoying. Even though you feel there’s not enough time in the day, spend the extra fifteen minutes to categorize your expenses.
 
Set yourself monthly calendar reminders to send monthly bank statements to your bookkeeper. Make sure the reminders are set to repeat every month.
 
If you have a quality bookkeeper, they will remind you to stay current with monthly e-mails.