How to Simplify the Tax Return Process for Small Businesses

Simplify the Tax Return Process
Simplify the Tax Return Process

S-corporations, for example, typically face a 26.9% tax rate. This encompasses income tax, payroll tax, self-employment tax, and more. 

It’s a lot to keep track of and, worse, tax laws keep changing year after year. But, there must be a way to simplify the process, right? 

There is, indeed. To sum it all up, organization and preparation are key.

Small businesses are as unique as the people who work there. As such, the tax return process varies for each entity. Still, there are several ways to streamline the process and make tax season a breeze. 

Be Vigilant About a Checklist

As the year goes by, you might open a new bank account, consider a new investment opportunity, make a large charitable donation, or open up a new IRA. That’s all well and good.

But, anytime you make financial changes, you must house them somewhere in an Excel spreadsheet. This way, when tax season rolls around, you simply have to pull up your spreadsheet, print out or download your documents, and then send them on their way. 

Be Tech-Savvy

Be as tech-savvy as you possibly can. We mention this because there are a lot of opportunities to handle a large portion of the “document gathering stage” prior to tax season. 

For example, if you invest in accounting software, it’s likely to house most of your checklist. It will link to your bank accounts and help you track the expenses you plan to write off at the end of the year.

This eliminates the unenviable paper chase that often comes when companies save their receipts in a pile somewhere. Turn that pile into an e-file and save the hassle. 

Schedule Quarterly Check-Ins

You’re seeing the theme here, aren’t you? An ounce of effort throughout the year keeps a hefty headache at bay come tax time. 

If you establish quarterly check-ins, you can review bank statements, make sure write-offs are earmarked, and ensure you’re making wise decisions about your cash flow. 

One of the most important documents to have in hand at this time is a tax preparation document. Basically, it will ensure your checklist, accounting software, and check-ins are performing well.

It will act almost like a map, telling you to review things like wages and salaries, tax-exempt interest, dividends, IRA distributions, Social Security benefits, and more. 

Pay Special Attention to Your Expenses

We’ve mentioned write-offs a few times now. But, it can become such a nightmare to backtrack and locate these line items. So, we need to stay here for a moment. We’re going to reveal one of the most crucial small business tips. 

When you’re conducting your quarterly check-ins, the Schedule C form that small businesses must file should be in hand. It actually breaks out common expenses for small businesses, including the cost of: 

  • Advertising
  • Vehicle expenses
  • Contract employees
  • Employee benefit programs
  • Insurance programs
  • Rent or mortgage
  • Office supplies
  • Maintenance and repair
  • Licenses and permits
  • Travel
  • Wages

Can you imagine trying to hunt all that down at the end of the year? Or how about checking your previous orders in Amazon and separating the purchases that were for office supplies? This is like entering into a flood zone; you’d be washed away. 

As you build out your checklist and conduct your quarterly reviews, keep a sharp eye on your expenses. You’ll want every invoice and receipt filed and accounted for. 

Hire a Bookkeeper

As your business continues to grow, consider hiring a bookkeeper. You can bring someone in-house or take advantage of the many talented individuals out there today who act as virtual bookkeepers. 

You have to remember this: your accountant is not your bookkeeper. Your accountant files a tax return based on the numbers you provide him or her. That’s why, out of all the tax return tips you’ll read, being vigilant about record-keeping and organization is at the heart of it all. 

If you start to feel overwhelmed about being a stickler for spreadsheets, that’s your cue to hire a bookkeeper. You want the numbers you put before your accountant to be rock solid, earning you a decent return on last year’s hard work. 

Hire an Accountant

Even sole proprietorships often turn to an accountant when it’s time to file. Look at the countless waves of line items that need to be addressed. It can be a daunting process for even the most educated businessman or woman.

Often, it’s not because you’re not capable of doing it yourself. It tends to boil down to a lack of time to invest in the arduous process. 

When you have a reliable accountant to work with, you’ll learn more about small business tax returns. But, you’ll also know it’s being done right. Would you let your favorite local chef replace the engine in your car? No! So, why not leave the tax finagling to the professionals? 

Here are just a smattering of the benefits that come from outsourcing to an accountant: 

  • More free time
  • Added ways to save 
  • New insights and advice
  • Finance tips
  • Ability to tackle complex situations
  • Accuracy in reporting
  • Assurance in an expert

When you hire the right accountant, they’re like truffle hunting dogs. They can sniff out new write-offs almost immediately. We once knew an accountant who, for a freelance writer, deducted a portion of the square footage in her living room (as office space). These are the kinds of things that may be overlooked, but not by an experienced accountant.

Simplify the Tax Return Process Today

Start today. You can simplify the tax return process by being proactive. All you have to do is be organized, think ahead, and hand it off to the experts. Plus, you know what they say about death and taxes. Allow your accountant keep you out of the coffin.

Whether it’s crunch time or time for a quarterly check-in, we invite you to keep coming back to visit our blog. Each article is carefully curated with your success in mind.