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No one likes to think about taxes and so we’ve all been in the situation where we put tax preparation off until the last minute. But rushing your taxes can lead to unnecessary stress and costly errors. So before that April deadline looms up to meet you, take advantage of the time you have now to get organized so you can breeze through tax time and stay focused on the day-to-day priorities of your business.
Decide How You Will Complete Your Taxes
The first decision you need to make is whether you will do your taxes yourself or hire a professional. While hiring a CPA or other tax professional to assist you is the more expensive option, it is often well worth the investment. Business taxes can be complicated and tax laws change from year to year. Relying on an accountant’s expertise can help you make the most of deductions, tax credits and changes to tax laws that will benefit you. Having a tax professional prepare your tax return frees you from the task and lets you keep your mind on running your business. Plus, the cost of hiring a professional to do your taxes is, you guessed it, a deductible expense.
If hiring an accountant is out of the question budget-wise, a good alternative is one of the commercially available tax preparation software packages. A good program will walk you through each step, point out areas where you may be able to take deductions, complete all the calculations, and provide error checking features.
Organize Your Tax Documents
Whether you hire a professional or go the do-it-yourself route, the more organized you are, the easier it will be to get your taxes completed. Gather all your key information and create separate files for each category, such as charitable contributions, medical expenses, union dues, tax preparation fees, business-related expenses, and so on. Make sure to save and organize all relevant receipts. An accountant doesn’t necessarily need to see them all, as long as you provide them with the information, but if the IRS does question a deduction, you will want to have them easily accessible.
Review Last Year’s Return
Going over your tax return from the previous year can help refresh your memory about deductions, as well as “carry forwards” that may be applicable for the current tax year, such as capital losses. For example, if, in 2006, you incurred capital losses that exceeded the write-off limit against ordinary income, you can carry these losses over to your 2007 tax return and apply them in your favor.
Get Help
If you’re not sure where to get started to organize your 2007 taxes, visit the Small Business Development Center-Olympic College (SDBC-OC). SDBC-OC has resources available that you can use to learn more about filing tax returns for your business. The center’s certified business advisor can help point you in the right direction to make preparing your 2007 taxes as stress-free as possible.
(Editor’s Note: For SBDC counseling services and workshops contact Rand Riedrich at 360-307-4220, rriedrich@olympic.edu. For partnership opportunities, contact Wendy Miles, Director of Customized Training and Military Education at Olympic College at 360-475-7786. She oversees the operation of the (SBDC.)
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