No one (not even accountants) looks forward to tax time—but there are steps you can take to make the process less painful. Say goodbye to procrastination, and make 2018 the year you finally get your taxes organized.
Here are eight resolutions to get your taxes on track.
1. "I resolve to make my tax preparer's life easier next year."
Before you start organizing your financial records and taxes, talk to your tax preparer. They may have a system they want you to follow that reduces the amount of work they have to do—which saves you money in the long run. If you use cloud-based accounting software, you can even give your tax preparer their own account to access the information they need.
2. "I resolve to stop sticking my receipts in shoeboxes."
If you're still collecting paper receipts for your business expenses or recording your vehicle expenses on paper, digitizing these documents is one of the easiest ways to get organized. The IRS accepts digital copies of receipts, so there's no reason to hold onto paper anymore. Use tools such as Zoho Expense and BizExpense to scan, categorize and organize your expense receipts; TripLog and MileIQ track your mileage using GPS; and the BizXpense mobile app tracks both mileage and expenses.
3. "I resolve to organize my paper records.”
Even if you use cloud-based accounting software and digitize your documents, it’s hard to go completely paperless. Minimize the number of hard copies you keep: A portable file box should be enough to keep them corralled, and it’s easy to tote to your accountant's office if need be. "Back up" your paper documents by storing copies in a second file box at home.
4. "I resolve to issue W-2 and 1099 forms on time.”
Scrambling to send employees and independent contractors their tax forms at the last minute creates unnecessary stress for all concerned. To meet the January 31 deadline for delivering these documents, start organizing the information you’ll need early. Verify:
- Employees' names, addresses, Social Security numbers, paid time off, number of exemptions, total wages, and total pretax contributions to retirement or health savings accounts
- Independent contractors' names, addresses, Taxpayer Identification Numbers, and total wages paid
5. "I resolve to take all the deductions my business is entitled to."
Ask your tax preparer or accountant which tax deductions and/or tax credits apply to your business. Tax laws change from year to year, and purchasing new assets, hiring new employees or otherwise changing things up can make you eligible for different deductions. Ask about:
- Charitable contributions
- Business insurance
- Business vehicles
- Your home office
- Healthcare tax credits
- Interest paid on loans
- Business gifts
- Business travel
- The cost of last year’s tax preparation
- Startup costs
Visit the IRS website, and check with your state for other tax credits that may apply.
6. "I resolve to use a business credit card for expenses."
Using a business credit card for expenses whenever possible greatly simplifies tax organization. Most business credit cards organize your purchases into different categories so it's easy to track expenses. Just be sure you pay the credit card balance in full each month.
7. "I resolve to file on time."
You don’t want to miss any tax filing deadlines, especially if you have to make estimated quarterly tax payments. Visit the IRS website to find the tax filing deadlines that apply to you, get notified of deadlines and even connect to the IRS calendar. Working backward from the due dates, put "to-dos" on your calendar to get everything done in time. Will you need an extension on your filing this year? Be sure to file for your extension in time.
8. “I resolve to spend time on taxes every week."
Just as you can’t expect to stay in shape if you only exercise once a year, you can’t expect to get your taxes in order at the end of December. Make "fiscal fitness" part of your ongoing routine by setting aside an hour each week to organize and update your tax information. Block the time off on your calendar, keep the appointment with yourself, and you’ll be in great shape at tax time.