SBDC Business Tips

Filing and paying your taxes is something that every small business owner can not avoid, but preparing will make the task less stressful and frustrating.

Here are some tips to help you prepare:

Use Accounting Software to Organize Your Bookkeeping

Using an accounting software will help get your books done quickly to focus on profit-generating tasks. It also keeps your information in one place, making it simple to reference past transactions. You won't waste time digging through paperwork or spreadsheets.

It automates your accounting by generating invoices and deposits. You have less room for error when the software computes income and expense totals.

It simplifies tax filing by keeping your business transactions organized by tracking and classifying your expenses. If your tax preparer charges an hourly rate, you will pay for the extra hours spent making sense of your records.

It protects you during an audit by keeping accurate and complete accounting records. Doing your books by hand often leads to more errors.

It gives you a running history of your business. By comparing your business income and expenses from one year or month to the next, you can project cash flow to meet your sales goals.

Set Up Separate Personal and Business Bank Accounts

Separate accounts ensure that you capture all items to the business in one spot. By separating your bank accounts in the beginning, you never worry about migrating or backtracking. A dedicated business account helps provide proof that you're running a legitimate, money-making operation.

Balance your Checkbook

Reconcile the books monthly to help with tax preparation, identify any unusual transactions caused by fraud, bank errors, or accounting errors. The practice can also help with spending money you don't have or hold on to cash you could be investing in your business.

Meet with a Tax Professional

It's probably a good idea to hire a trusted tax professional to prepare your taxes if you get confused by your taxes or end up having lots of questions. Don't cut corners on essential things such as taxes. Hiring a professional can help eliminate errors and ensure your returns are prepared correctly.

A qualified accountant or CPA can guide you through the tax process, let you know about any credits or deductions your business may be eligible for, and answer questions you may have that pertain to tax deadlines, COVID-19 programs, and resources.

About the Writer

Norma Rodriguez

"Business Tips" was written by Norma L. Rodriguez, Director and Certified Business Advisor, of Texas A&M International Small Business Development Center.