You survived another tax season!
Although it’s tempting to head for the door, there’s still plenty to do in preparation for next year.
These 6 actions will help with your ongoing tax obligations and prepare for a smooth 2018-tax season:
Spend some time reflecting on how tax season went this year.
Perhaps next year you can implement new tax planning strategies to make tax time less stressful and reduce your liability.
Did you take full advantage of all personal and business deductions?
What about credits and other tax-saving measures you may have qualified for?
Were your returns submitted on time?
Were you comfortable meeting the deadlines or did you find yourself anxiously rushing in the end?
Being organized and prepared can make a huge difference.
2. Work On Your Books
Now is the time to catch-up on work that may have fallen behind during tax time.
Ensure all new transactions have been posted to the right accounts.
Reconcile all bank and credit card accounts.
Now that you’re well into the second quarter, look at how things are going. Prepare a profit and loss statement and review your cash flow.
Compare them to the same period last year, maybe even the year before, for insight into the progress you’ve made.
If you’re using an unofficial accounting system like spreadsheets or shoeboxes, now may be the perfect time to upgrade to a cloud-based system like QuickBooks Online.
It will greatly improve accuracy and save lots of time and aggravation.
4. Financial Review
What’s the overall financial standing of your business?
Since January 1st, have profits increased, decreased, or stayed the same?
Did you run into unexpected expenses? If yes, then how much did you have to spend?
If sales remain consistent, are you on track to have a solid year overall?
Examine your personal finances, too. Non-business related income sources and personal expenses could affect of your business’s overall success.
5. Estimate Tax Payments
If you earn 1099 contract income, then you are expected to make quarterly estimated tax payments to the IRS.
Although it’s nice that you may have received a big refund, it means you’re paying too much during the year when the over-paid money could have been used in ways that were more beneficial to your business. It may be time to revisit and adjust your estimated tax payments.
On the other hand, if you had a large tax bill then you didn’t pay enough. Adjusting your estimated tax payments could get you back on track and help avoid substantial tax-related expenses and surprises next tax-time.
6. Plan For The Future
Being self-employed breeds uncertainty; it’s the nature of the beast. Therefore, saving for the future is especially important for business owners.
Sooner rather than later, implement a retirement plan or contribute to the one you already have. Whether or not you’re a business owner.
Consider a Roth or traditional IRA. Both have different tax advantages and are just two of the many retirement plan options available.
Taking a few minutes to perform these 6 actions and learn from last year’s tax experience may make for a much easier and less stressful 2018 tax-filing season.
Your future-self will thank you for it!