It might seem early, but October is the perfect time to get prepared for year end taxes and projections.
A common problem with small businesses is that they spend a lot of time reacting to problems. It’s much better to proactively search out problems and keep them from happening. What is a reasonable and expected problem when running a small business? Taxes. If you earn money, there’s a pretty good chance that you or the company will owe taxes. Taking a moment to review the bookkeeping in October can save you late minute surprises in December or April.
One: Make a list of all the tax returns that are due. If you have business return due, make sure you research the proper due date. Many business returns are due on March 15th, not April 15th. Know the due dates. Late filing fees can be hundreds of dollars a month for a business.
Two: Research any known tax issues. For instance, if you have sold a rental property, find out what the taxable income is for that transaction. It’s complete, you can get it done early. Do some early tax planning or understand what tax will be due. Don’t be surprised when you owe a pile of money.
Three: Review your estimated tax payments. There is one more due on January 15th. Do you need to adjust that amount? Remember that estimated payments are an estimate and the taxable income can vary quite a bit.
Four: Cross check your payroll system to make sure it’s operating properly. This is the area that causes the most fines/penalties for small business owners. Be proactive.
Five: If you need to switch CPA’s or tax professionals, this might be a good time to interview new professionals. I always suggest interviewing about three so you can find a good fit.
Six: Make sure your bookkeeping is up to date. It’s much easier to find help in October than in April. It’s also less expensive. If you think fixing nine months of paperwork is daunting, try 12 months of paperwork in January. 🙂
I hope you find some of these commonsense tips helpful. These really are some common pain points for small business bookkeeping and taxes.