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Prepping for Tax Time
Remember how diligently you used to prepare for a test (okay, most of
the time, anyway). Well, like it or not, that kind of study, organization,
and attention to detail is critical for small businesses that have any hope
of making tax time a less painful and less expensive experience.
Sounds pretty basic, but the truth is the majority of small-business
owners are so caught up in the day-to-day rigors of operating their companies,
they are often ill prepared to deal with their accountants come tax
time. "It's not uncommon for people to hand us 12 months of unopened
bank statements and expect us to pull it all together," says Becky Morgan,
staff accountant at Bigelow & Co., a CPA firm in Portsmouth, NH.
Without properly gathering and organizing the material that your
accountant requires, Morgan says, tax preparation becomes a much more
complex and time-intensive endeavor. Moreover, it's far more costly for
the business owner, and companies lose out on any tax planning.
Consider these tips to help you prepare for tax season:
- Quarterly reviews. Authorize your accountant to do quarterly reviews
during the year. That way, they will get a quick heads-up on any inconsistencies
or problems, and they can rectify them immediately.
- Hunt and gather. Assemble all the necessary documents and materials—
bank statements, loan balance sheets, cash on hand, etc.—proactively
instead of waiting for your accountants to specify what they need. By having
everything all together and ready, your accountant can get a jump on your
return and use the extra time to focus on things like retirement planning.
- Go to school. Spend some extra money to have your accountant train
you or your financial person on how to properly do tax-prep chores. By
learning how to gather material on your own, you decrease the amount
of time the hired guns have to spend on your tax preparation.
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