Start Using Accounting Software

The accounting software doesn’t have to be something that is complicated. It needs to track sales and expenses. Some software integrates with your bank account to keep track of everything you deposit and all expenditures. At the end of the season, you’ll be able to print out reports for your accountant. Accounting software also helps to minimize mistakes on your part and the on the part of your accountant.

Create a Filing System for Receipts

Have a file folder for each month. Keep all of the months of one year in a Redwell so that everything is all together. If you keep the current and previous months’ folders on your desk, you simply place the receipts in the appropriate folder. As you move into the new month, put the previous month’s file folder in the Redwell and create a new folder for the new current month. At the end of the month, scan the receipts into a monthly file on your computer. Additionally, before you put that receipt away, make a note on it. If you took a client to dinner, you might write the client’s name and the reason for the dinner meeting.

Furthermore, at the end of the month, clip all like receipts together. If you have several receipts for office expenses, clip them together. Keep software receipts in another clip. Entertainment expenses should be clipped together. Add a sticky on top of each clipped pile with the total of all receipts for the month. Each clipped pile should have its own total. At the end of the year, when you have to itemize your expenses, you simply need to add up each monthly amount, which is written on a sticky, instead of adding up every single receipt for the entire year.

Keep a Business Journal

Enter your day’s events into a journal every day. You could hand-write it, or better yet, enter the notes on your Google or Outlook calendar. If you are audited, you will have information to substantiate your receipts. Adding information about meetings and who you met with should match the receipt notations. For example, if you took a prospective client to Red Lobster, you would write in the client name, the place you ate and the gist of the meeting. On the Red Lobster receipt, you would add the client name and the gist of the meeting to match what is in your daily planner.

Set Aside Money for Taxes

This is something not many people think of. Open a separate account just for business taxes. You could automatically transfer a set amount each week into the account or you could transfer the exact tax for each sale as the sale comes in. For those who don’t have the time for the extra step of making a transfer for each sale, check to see what your tax obligation was for the previous three years. Add them together and divide by three. This is your average taxes for the past three years. Now, divide that number by 52 to get the amount you should transfer on a weekly basis.

If you believe your business is going to do better than it has in the last year, pad the weekly amount a bit. When it comes time for taxes, you’ll have the amount in the extra account and won’t have to panic when your tax obligation is higher than you expected.

Additionally, if your tax obligation is lower than expected, you could leave the money in the account to get a head start on the next year, or you could move it to a business savings account as extra capital.

Do Not Co-Mingle Business and Personal Finances

Make sure you keep business and personal finances separate. When it comes to tax time, it’s much easier to do your taxes if you don’t have to sort through every transaction. Keep a separate bank account for business and personal; and take a paycheck every week, every two weeks or every month. You’ll also be less tempted to use business funds for personal use or vice versa. By keeping business and personal finances separate, you’ll make tax time much less stressful and easier on you and your accountant.

Contact France Law Firm

If you have tax questions or find yourself or your business being audited by the IRS, contact France Law Firm to set up a consultation to discuss your tax issues.

The post Tips on Organizing Taxes for Your Business appeared first on France Law Firm.

Taxable Income Reductions

Financial advisors and tax attorneys almost always push clients to create and contribute to retirement funds. That’s because this can be one of the gems to reducing your taxable income. IRA payments are considered a “pre-tax” contribution. That means that for every dollar you put into these retirement accounts, that’s a dollar you are not required to pay taxes on this year. Keep in mind, IRAs are really a tax-deferment plan and the government will be looking for that money in your twilight years. Like Ben Franklin said, taxes are certain. At least you’re softening the blow now and building financial security for the future.

The Sustainability of Spending Money

The green energy movement has opened up numerous doors for people to save money on taxes. Replacing antiquated heating systems, drafty windows and installing solar energy panels leads to significant tax rebates. These upgrades also improve your quality of life and increase property values. Taking these positive steps also gives you a wonderful feeling about doing your part for the environment. By spending money on energy efficiency, you’ll enjoy a better tax situation.

Plan Ahead

The thought of making charitable donations often hits you right in the middle of the gift-giving holidays. In many cases, that means having to stretch budgets and resources to effectively do both. After the season passes, many people look back wishing they could have given more. By practicing monthly or quarterly financial planning, you can allot resources in advance and feel good about the happiness spread through gifts and donations. Many of those charitable contributions are also excellent tax deductions. They’re the gift that keeps on giving.

It’s important to treat your personal finances like a business. And like any company, there are strategic investments to consider. You can diversify your portfolio by putting money into things like municipal bonds that are issued to fund projects such as airports and schools. These investments are considered tax exempt from federal and, usually, state taxes. Tax planning means making key decisions about your financial health in a timely fashion, not after the fact.

Brush up on previous years’ tax filings and use those records as an indicator for future decisions. Don’t hesitate to meet with your financial advisor or tax attorney. Get a clear understanding of the deductions you are taking full advantage of and those that could see improvement. Discuss potential tax credits and changes to the tax code. Long-term planning will undoubtedly make the process much easier from year to year.

Check the Box for Stress Deductions

One of the worst and most common things people do in terms of tax preparation is procrastinate. That personal policy actually doubles your stress. Not dealing with tax information leaves that little voice in the back of your mind that something remains unfinished. When crunch time arrives, you’re faced with a Herculean organizational task. Investing small amounts of time year-round will make things run much more smoothly and quiet that inner voice.

• Have A System: Create a system that works for you and streamline it from year to year. After all, taxes are forever. This doesn’t mean using and old shoe box full of crumpled receipts. There are plenty of inexpensive tax software products on the market. Even an Excel spreadsheet can provide basic expense tracking. Being organized is half the battle.
• Keep Receipts: You won’t save any extra money by having all of your receipts. On the other hand, if you get randomly audited, the IRS may reject certain expenditures and deductions without them. The IRS could also start a costly tax audit as well. A notebook and glue stick are sufficient to keep proof of payments organized. Many small business owners glue them to a page and make an entry about what that money went toward. In the event of a computer crash, this gives you a hard copy backup.

Benjamin Franklin and Founding Fathers fought the American Revolution to ensure fair and equitable taxation. You are assured a voice in how the government taxes your income and assets. Utilizing good organizational practices and financial planning can make your ledger sheet a little more equitable and easier to manage.

It’s important to work with an experienced attorney on tax-related matters. At the France Law Firm, we are here to help.

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