7 Things to Do After Tax Season to Set Up Your Business for Success Next Year

You didn’t start your small business to become a tax expert. You started it to do work you love. But taxes are a part of the deal. And how you handle them between filing seasons makes a big difference.

If you only think about your books when a tax deadline is looming, you already know it means scrambling for receipts, worrying about gaps in your records, and months of stress building up from avoidance. Even if you hand off your return to an accountant, there’s still legwork only you can do.

The good news is that a little attention throughout the year can go a long way. Think of your taxes less like an annual event and more like an ongoing business process. With the right habits and tools in place, tax time doesn’t have to be stressful at all.

Here are seven things to do after tax season wraps up to set yourself up for smoother, less stressful filing next year.

Toss the shoebox, find a better way to log expenses

Does your team affectionately refer to you as the shoebox receipt collector? Does your accountant cringe when you drop a collection of receipts off at their office? Whether your “shoebox” is an actual box, a file folder, a manila envelope, or a desk drawer, the shoebox method isn’t an efficient way to manage your expenses and makes tax time a lot more stressful than it needs to be.

Fortunately, there’s an easy fix. Log expenses as they happen rather than waiting until filing season forces your hand. Taking 10 or 15 minutes a week to stay on top of receipts is far less painful than spending hours or days reconstructing months of transactions in the spring. It also reduces errors and helps you catch missing or inaccurate records while the details are still fresh.

Separate your business and personal finances

Do you have a separate business checking account and credit card? You should, no matter the size of your company. Maintaining separate accounts makes it much easier to track business income and expenses for your tax return. 

It’s also an important protective measure. Most tax authorities, including the Internal Revenue Service (IRS) in the U.S. and the Canada Revenue Agency (CRA) in Canada, pay attention to whether you’re operating like a real business or simply pursuing a hobby. 

In the U.S., the IRS can apply hobby loss rules to disallow deductions if you don’t operate in a “businesslike manner.” That includes keeping complete and accurate books and records. 

In Canada, if your activity looks more like a hobby than a business, you could lose the ability to deduct expenses against that income. Keeping a dedicated business account helps establish that separation. Since we’re discussing it, it’s important to never muddy the waters between your personal and business finances. Keeping them separate protects you in more ways than one, from cleaner books at tax time to stronger legal protection if your business structure ever comes into question.

Automate your accounting process

If you haven’t already, it’s time to bring your business into the 21^st century. Invoicing and accounting software, like FreshBooks, can be instrumental in driving efficiency and accuracy year-round, not just at tax time.

Modern accounting software connects to your bank and credit card accounts, automatically syncs transactions, and even categorizes expenses for you. This saves you time every month and ensures you won’t miss any deductions when you file.

Pro tip: Track your business mileage

If you drive your personal vehicle for business, consider downloading a mileage tracking app. Most tax authorities require a “contemporaneous” mileage log to support vehicle expense deductions. That means recording trips as they happen, not reconstructing them later.

Estimates won’t hold up in an audit. So save yourself the trouble of trying to recreate a year’s worth of driving from your calendar and Google Maps. A good mileage app does the work for you in real time.

Back up your electronic records

There are many affordable options for storing your data in the cloud. If you’re still relying on a local hard drive or server, ask yourself what would happen to your records in the event of hardware failure, theft, or disaster. Get in the habit of backing up your files to a cloud-based server or a secure remote location.

This is especially important for tax records. Tax authorities won’t make exceptions simply because your records are missing or damaged. Have a contingency plan in place for all your important tax documents, just in case. The good news is that if you’re already using accounting and invoicing software like FreshBooks, your data is automatically backed up. That’s one more reason to make cloud-based accounting tools a core part of how you run your business.

Work with an accountant or tax pro

Many small business owners try to muddle through tax preparation on their own. Some people actually enjoy it! If that’s you, there’s nothing wrong with the DIY route, at least in the early stages.

But keep this in mind: as your business grows, calculating what you owe becomes increasingly complicated. It’s not just your income tax return. Depending on where you’re based, you may also have local, state, or provincial taxes to contend with, along with payroll remittances and sales tax.

If bookkeeping and taxes feel more like a dreaded chore than a manageable task, putting them off does you and your business a real disservice. A tax pro or accountant with industry expertise can help you file accurately, plan strategically, and avoid costly surprises.

Not sure if you need (or can afford) ongoing help? Even a one-time consultation with an accountant can be valuable, especially if your finances are still relatively straightforward.  They can review your setup, flag anything you may have missed, and point you toward deductions or credits you didn’t know you qualified for. Think of it as a tune-up rather than a full-service commitment.

As your needs grow, so can the relationship. A good accountant will stay on top of tax law changes so you’re not blindsided, and help you think proactively rather than reactively.

Pro tip: Collaborate directly in the accounting software

The easier it is for your accountant to access your financial data, the better positioned they are to give you timely, accurate advice. If you use cloud-based accounting software like FreshBooks, consider giving your accountant direct access so they’re always working with real-time numbers. Or, if you prefer to keep your numbers close to the vest, you can also export clean, organized reports or CSV files that your tax pro can import directly. No need to share system access.

Make the most of your deductions

One of the most beneficial things you can do for your business is to understand what you can deduct (and actually claim it). Many small business owners leave money on the table simply because they don’t know what’s available to them.

The specific deductions and credits you can access depend on where you’re based and how you structured the business, but it’s worth knowing about some common examples.

For example, in the U.S., you may be able to deduct up to $5,000 of startup expenses in your first year of operations. You may also claim a credit for research and development activities or write off the full cost of new equipment in the year you purchase it.

Canada has similar provisions, including the immediate expensing rules for eligible depreciable property and Scientific Research and Experimental Development (SR&ED) tax incentives for qualifying R&D activities.

Regardless of where you operate, some often-overlooked deductions tend to apply broadly, like those for home office expenses, retirement plan contributions, professional development, and business-use vehicle costs.

It’s also worth understanding which tax breaks apply to your business versus your personal tax return. Your accountant or tax pro is your best resource here. A proactive conversation about deductions well ahead of tax season gives you time to actually act on their advice.

Make accurate estimated payments

Whether you get professional help or handle it yourself, making estimated tax payments is crucial. It helps you avoid a large, unexpected tax bill at year-end and keeps your cash flow more predictable throughout the year.

In most jurisdictions, this isn’t optional. Many tax systems operate on a “pay as you go” basis, meaning taxpayers pay taxes as they earn income rather than in a lump sum at filing time.

In the U.S., the IRS requires quarterly estimated payments, typically due in April, June, October, and January. In Canada, the CRA generally requires quarterly tax installments from businesses and individuals in March, June, September, and December. These are often based on your previous year’s returns. If you work with an accountant or tax pro, they can help you estimate your tax liability and stay on top of required payments throughout the year. 

If you underpay, you could face interest charges or penalties at year-end, regardless of where you’re based. So it’s worth getting this right.

Your actual tax liability depends on many factors, including your business structure and eligibility for deductions and credits. Talk to your tax professional for a more accurate estimate, but setting aside roughly 25-30% of net profit is a reasonable starting point for many businesses, particularly in the early stages.

And if you overpay? The money comes back to you as a refund or credit when you file, so erring slightly on the side of caution is rarely a bad move.

Pro tip: Set up a tax savings account

If you’re not sure where to start, consider opening a dedicated savings account just for business taxes. Each month, transfer a percentage of your net profits into that account and treat it as untouchable until it’s time to pay taxes.

File on time, every time

No matter what else is on your plate, you probably already manage deadlines, appointments, and targets as a matter of course. Your tax filing deadline deserves the same treatment: non-negotiable.

Now that this year’s filing season is behind you, shift your mindset from reactive to proactive. When you build better habits throughout the year, maintain clean records, automate processes, set money aside for taxes, and seek professional advice, tax season is easier. You have a clearer picture of your business finances throughout the year.

The seven steps outlined here are your starting point. Come next filing season, you’ll be prepared, not scrambling.

Ready to put these habits into practice? FreshBooks makes it easy to track expenses, log mileage, and keep your books organized year-round so tax season feels less like a fire drill and more like a formality. 

Try FreshBooks today and see how much smoother next year can be.