Tax Thursdays! Get ready for the home stretch
Welcome to the FreshBooks Tax Thursdays series! We know a lot of small businesses struggle with taxes, so we’re hoping to help make it a little easier by featuring advice from leading accounting professionals every second Thursday from January to April.
Well, you can’t say I didn’t warn you. In case you missed it, I wrote an earlier post about being prepared early for tax season.
If you haven’t started to prepare your return and are in a panic, don’t worry, there’s still time to file before the deadline (April 15th in the US and April 30th in Canada). Also, if you’re reading this in middle of May, consider my title as: “Good news: you can reduce your penalties by filing right now!”
First, try to dial back the panic a few notches. Unless your financial life is really complicated, getting your taxes filed won’t take as long as you think. Below we let you “choose your own adventure” to offer some advice on how you can prepare your taxes either by yourself, or with the help of a tax preparer. In either case, there are a few basic guidelines to follow to make sure you’ve covered all your bases:
Adventure Option A:
If You’re Doing Your Own Taxes
1) Take as much time possible
Yes, you’re in panic mode right now. However, if you’ve got 3 days, work on it for 3 days if that’s how long you need. Rushing through it 2 days early, filing it, and then realizing your mistakes on the due date isn’t going to do you any good.
2) Err on the side of the government
This is not the time to “stick it to the man”. If you are really pressed for time, spend more time making sure you’ve claimed all of your income first. Then, claim only the deductions you can prove while you’re preparing the return. I know, that receipt you lost will probably show up, but don’t count on it. You can always file an amended return later. What you don’t want is the stress of an audit added to the stress of this deadline.
3) Use the right tools
Ok, if you’ve been doing this by hand for years, then by all means, go ahead. In any other case, get some tax return software or use one of the online offerings. My personal preference is TurboTax, but there are other options out there (I just haven’t used any of them). These programs will do a lot of handholding through the process, which will really help your chances of filing an accurate return.
Adventure Option B:
If You’re Getting Help
1. Confirm availability
This is a really busy time of year for your bookkeeper/tax preparer. Please don’t assume that they’ll have time for your last minute return. Contact them immediately, explain your situation, and have them confirm that they will be able to complete your return on time. If you are filing a corporate return, or a very complex personal return, it will take much longer, so plan accordingly.
2. Be Organized
This is similar to #1 for the DIY’s. Don’t just toss your pile of receipts into a plastic bag and run out the door. Spend as much time as possible. Showing up with a ball of paper that looks like the jumbled lights from “Christmas Vacation” will not help you. Bring a copy of your earning reports, a neatly organized folder of your income receipts, and another envelope of your expenses. If you’re doing this digitally, make sure the files you send are in a format your accountant can open. Above all, make sure you’re available to answer any questions they might have.
3. Seek advice
In most cases, your bookkeeper/tax preparer can provide more than just a completed return. They are also a good source of advice. Talk to them about your return. Find out where you could stand to improve things this year. Is there something you haven’t been claiming that you should? Do you have money sitting in a checking account when it could have been used to top up your retirement savings? Even more importantly, they can help you get more organized throughout the year, so you don’t end up in this position again next year.
One last piece of advice
Take a few moments to go through the previous posts in the Tax Thursday series before you begin. You might find some advice that will help you with your return. Good luck!
Eric Matthews is the author of thatbookkeeper.com, a blog dedicated to helping small businesses get the most out of their resources, with a focus on Bookkeeping.