When you’re walking through the checklist of things to do before end-of-year, it can feel overwhelming. But then again, when aren’t you up against a slight feeling of overwhelm as an entrepreneur? Just think of it as part of the “hustle.”
Aside from the higher level goal-setting and budgeting you’ve done (or are in the process of doing) relative to next year’s growth strategy, there’s also that looming tax deadline. Looming might sound like a strong word when we’re roughly three to four months out from filing deadlines but the reality is — as a business owner — you always have less time than you think. And more potential roadblocks and distractions than you can plan for.
Even if you have an accountant, it’d be a mistake to assume they’ll have ample time to focus on your filings alone when they’re likely to be inundated by similar expectations from every other client on their roster. Ultimately, when you’re prepared from the get-go, your accountant will be better equipped to optimize time spent on your account and maximize savings.
Make sure you’re knocking out the following todos as you work towards business readiness for 2020 taxes.
Review Your Expenses
Before you start pulling financial reports for the year, it wouldn’t hurt to review your expenses. This is a major area of potential savings for small business owners — naturally, the more tax deductions you can take advantage of, the better.
These will differ based on your location (the U.S. vs. Canada) and business type. For certain expenses, like that of the home office, there may also be some additional calculations to run based on square footage. Pay attention to the details and if you’re unsure of anything, make a list of questions to run through with your accountant.
Ensure Your Payroll Documentation is in Order
If you have people on your payroll, consider it another puzzle piece to account for when preparing for 2020 taxes. Whether you have a team of ten or a single virtual assistant, you’ll have to make sure all of the necessary paperwork is in order for handing off to your accountant (if you have one) in January.
Full-time employees will come with their own set of tax considerations — especially if you provide retirement-based contributions, insurance coverage, etc. And contractors, though less engrained in your business, should be followed-up with for the necessary tax return documents if you haven’t collected on those already.
Consolidate Year-End Statements
With every line item and receipt accounted for, let the consolidation begin. Work through year-end statements for your credit cards, bank accounts, lines of credits and loans — on top of payroll journals. Your CPA can then double-check and compare against your reports once they get started on filing.
In theory, all of this should be a relatively straightforward process depending on your level of record and organization. If you’re new to this game, it might not be perfect. You may even end up owing more than you’d bargained for come income tax return time.
Regardless, all you can do is learn and work to improve with each year. Eventually, you may even find yourself in a place where the overwhelm feels a lot less whelming and preparing for taxes feels second nature.