April 17th?! Where do I even start?
Yup, this time of year it seems like all small business owners are starting to feel that uncomfortable tax crunch. For many, they are either sifting through scattered receipts, documents, and mileage trying to make sense of it all, OR they are actively putting it on the back burner in hopes that this year Uncle Sam will magically look past their missing documents. If you are the latter, I hate to spoil it for you, but he won't. Uncle Sam is like the Liam Neeson of collections:
whoa.... that got dark quickly
The good news is that there is a way to avoid both Liam and Uncle Sam's wrath: (1) be prepared, (2) track your numbers (expenses, mileage, and other write-offs), and (3) don't hide. Most importantly though:
find a PROCESS
that makes all those things
as easy as possible.
There are systems and programs that compile expenses, apps that track your location to record your mileage for you, and helpful professionals (*cough* me *cough*) that will allow you to make sense of it all. The more you can systematize your business finances, the more time you will save yourself and your CPA ...and by saving your CPA time, you will in turn be saving yourself SO MUCH MONEY!
So if you don't yet have a process, or if your process sucks, use this year as the year to not only do your taxes well, but also to create a system that you can copy and use again the next year. If you don't want to use an accounting program, use excel or Google sheets to track your monthly expenses and categorize them for the year (it's free). If you don't know how to create a P&L (profit and loss) statement, take the next couple of days and dig in. Handing your CPA a well organized P&L essentially makes it so they just have to plug numbers into the right location. You're hiring a professional tax accountant for their knowledge of how to maximize your refund/write-offs, not to organize your chaotic box of receipts (literal or metaphorical). Our tax code is complicated to say the least, but by not staying organized in your business, you are most definitely leaving money on the table.
The other thing to keep in mind is that it IS POSSIBLE to organize and systematize. I know from experience that it seems overwhelming and like there is not enough time in the day. Having come out the other end though, I can tell you the peace of mind alone is worth the work.
At Homeroom, we offer in-person organizational courses to prepare for taxes, but we're also working hard to offer specific Excel/Google sheets for those who are not located in one of our upcoming Study Hour locations.
*on a side note, if you're in the Denver area on April 27th, we are putting on a finance course in the afternoon where we will go over everything that is mentioned above (organizing expenses and creating a P&L).