As I sit here thinking about the end of this tax year, I can’t help but think about the conversations I have with my clients in April when I have to be the bearer of bad news and tell them that they owe taxes. They look at me in shock and say, ‘What do you mean, I had no idea that I would owe that much!’ Typically, it’s a person that is self-employed or is a shareholder in a company whom hasn’t kept up with their books and has no clue what his/her numbers are until the end of the year when they are forced to do it because taxes are due soon.
By this time, it’s too late for me to help them. I want to prevent this from happening to our small business owner clients. Please let me help you.
How can you prevent the sticker shock at tax time?
1. Make sure your bookkeeping is up-to-date at all times during the year.
This means, using some form of accounting, whether it’s a hand written ‘One Write’ system or a computer program like QuickBooks. It means, entering every transaction you make; deposits, checks, debit cards, etc. Also,and, this is very important, the bank account needs to be reconciled every month. Yes, every month.
Besides, your numbers are a tool to help you grow your business. Accurate financial statements show where you have been, where you are, and how you got from there to here. If you know how you
got where you are now, it is easier to plan improvements to get where you want to go.
If the thought of doing your books gives you the creeps then get someone to do it for you. (We can help; we offer bookkeeping services, too.) It’s well worth the money because you’ll have a handle on your numbers and you’ll have time to do what you do best.
2. Prepare a tax plan based on your current year’s information.
Typically, you take your current year financial statements project the numbers to the end of the year, and, working with a copy of your last year’s individual tax return, figure out the estimated tax that would be due.
This is when you should enlist the help of a professional. The best time to have this prepared is in September so you have time to implement tax saving strategies before the end of the year when it will be too late.
For more information on preparing a tax plan or for any help with your tax and financial questions, please give us a call. We’d be happy to help you prevent your STICKER SHOCK!