Small business owners are under a lot of pressure during the annual tax season. But once you've prepared and filed your forms, take a bit of time to learn from the process to prepare for next year. It's helpful to evaluate your process and your accountant's performance (if you used one) to determine if a higher level of service is right for your business.
Here are actionable steps to take after tax season:
How was your record keeping this year? Did you potentially lose out on business deductions because you were scrambling at the last minute to organize a year's worth of receipts? Make this the year you simplify the process by tracking your expenses as you go, on the go. It's easier said than done for the small business owner, but there are apps and software to help simplify the process. Check out Mile IQ for tracking your mileage and Expensify or Evernote to quickly scan and organize those receipts.
In addition to staying organized, educate yourself on local, state, and federal tax regulations to maximize your deductions, even if you use an accountant to prepare your annual taxes. Not only will you be able to organize your documents in a more efficient manner, you may also have a better understanding of why your accountant requests certain information.
If you haven't already created separate banking accounts for your personal and business banking needs, you may want to consider doing so, even if you are a one-person shop. Splitting your accounts helps streamline tax preparation and provides a cleaner way to address the health of your business. Start by opening a separate checking account with your bank and secure a credit card exclusively for business expenses.
More Resources:
5 Tips for Separating Your Business and Personal Finances
How to Take Back Control of Your Business Finances
5 Financial Reasons Businesses Fail
Did your accountant communicate with you effectively? Did they offer proactive tips after preparing your annual taxes? Did you have to file for an extension? Now is the time to evaluate the performance of your current accountant. An effective accountant should feel like an arm of your business, invested in your goals and overall success.
As a small business owner, you may have a friend or family member handling your tax preparation. This can be a difficult situation if you find errors or become subject to an audit. As your business has grown, so too have the financial obligations. It may be a sign that you need a professional accountant with more experience.
On the other hand, if you do use a professional accountant for your annual tax prep and filing, you still need to evaluate their performance. Were they willing to explain your tax forms, any potential deductions, and the filing process? Did you feel comfortable that they had your best interests in mind? You shouldn't feel stuck in an accounting relationship that didn't deliver up to your standards, and switching to a new accountant is easier than you think. Your accounting service has a strong impact on the long- and short-term success of your business. If the one you’re working with now isn't giving you the support, advice, and service you expect, then they aren’t the right financial partner for you.
More Resources:
How to Transition from In-House to Outsourced Accounting
3 Signs You've Outgrown Your Current Accounting Firm
Checklist for Evaluating Your Current Accounting Service
Annual tax filing and one-time advice may not be enough to grow your business. A monthly accounting firm not only saves you time to run your business well, freeing you from the books, the service also provides proactive tax advice year-round.
By helping you plan early for your tax responsibilities, they ensure you don’t run into surprises at the end of the year. A monthly accountant will also help minimize your liability by offering personalized tax-saving strategies.
Unlike annual accounting services, which just offer year-end tax preparation, a monthly service can actually advise you on how to run your business better. Your monthly accountant knows exactly what is happening with your finances throughout the year and can help you understand trends, make predictions, and plan ahead to achieve your goals.
More Resources:
12 Questions to Ask Before Choosing an Accounting Service
3 Services Your Business Needs to Thrive
Wondering if it's time to consider a monthly accountant but not sure about the cost and value of hiring in house or outsourcing? Download our Accounting Cost and Value Comparison for Small Businesses today!