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Tax season has come and gone, and for many business owners, it’s a huge relief. From first-time entrepreneurs to seasoned business owners, tax season can bring about anxiety and frenzy. Between getting proof of your tax-deductible expenses to creating 1099s and W-2s for your employees, the added duties of tax season often make life even more hectic.
To get through your business taxes with minimal stress and effort next year, it’s crucial to create a solid plan before you file. In addition to tapping into the services of a Certified Public Accountant, use these essential tips for filing next year (and beyond).
Getting ready to dive in
If tax time left you feeling anxious, it is best to get your body in a calm state before tackling your to-do list for next year. Remember, taking steps now to smooth out the bumps can make 2021 feel like a breeze.
Get as organized as you possibly can. Create an effective filing system for bringing all of your forms, receipts, and other documents together. This organization will pay off when it comes time to hand over everything to your tax professional, and can save them countless hours and effort.
Also, consider making both a digital and print copy of each of your documents. In the event that you lose a physical copy, you’ll always have a digital backup. Digital copies also make sending and uploading documents possible (in case you are required to do so).
Handling stressful tax-related issues
Occasionally, tax time can bring up some stressful situations. Whether new or known, no one ever enjoys dealing with unpleasant tax issues.
However, these problems are more common than you might believe. There are about two dozen errors that small business owners have been known to make when filing. If you find yourself needing help with small problems during the year — or more significant issues such as liens, wage garnishment, or back owed taxes — a CPA can help you overcome your specific challenges.
Finding easier ways to file and create forms
With so many advancements in digital tax preparation, it is easier than ever before to file and create forms of all kinds. Not only do digital solutions save you time, but they can also prevent errors.
One example is with 1099s. There have been adjustments to the 1099 form, as the IRS has reintroduced Form 1099-NEC. If you’ve paid any consultants or freelancers over $600 in 2021, you’ll need to include this non-employee compensation in Form 1099-NEC instead of Form 1099-MISC. With these changes, it is important to ensure that you are using the right form. But by using an online payroll system, you can file 1099 forms online. What is even more wonderful about this is that it makes it more effortless to pay contractors and to e-file quickly and easily.
Other ways to make next year hassle-free
In addition to the above, there are other steps you can take to relieve the pressure next year. First, always be sure to have a trusted tax expert in your corner. This is particularly helpful if tax-related questions come up in the middle of the year. Don’t wait until it is time to file to get the answers you need.
Additionally, consider searching for digital systems to help you with organizing your documents, receipts, and the like. Rather than having to worry about holding on to physical copies of everything, give yourself the peace of mind of streamlining everything onto a digital platform.
Your business taxes don’t have to stress you out. Instead, with a bit of advance planning, organization, and having the right tools and experts on-hand, your filing season can be a breeze.
by Chelsea Lamb