Although April 18, 2017 has come and gone, it’s a great time to go through a Summer Tax Checklist to keep you and your small business on track. Here are four things you can do to have a productive summer and prepare for a smooth tax season next year.
1. Evaluate Current Business Status
A great place to start your summer checklist is to evaluate your current business situation. It’s helpful to think of things you have control over, such as your business procedures and processes and how and where you spend money. Here are some specific items you can think about:
- Filing System
The ability to easily find various documents and receipts is helpful when evaluating expenses, forecasting for the future, and preparing taxes. Start by organizing and filing important paperwork, like employee files and business documentation followed by organizing and creating a process for recording expenses. If you feel overwhelmed, you could hire someone to assist you or take a class to learn best practices.
- Cost Savings
Look for ways to save money in the short- and long-term. For example, keep the air conditioning a few degrees higher in the summer or the heat a few degrees lower in the winter; eliminate subscriptions you don’t need or use; check to see if there is a less expensive cell phone plan or business phone or internet service. Remember that several short-term cost savings can turn into bigger long-term savings. If you have the time to audit your expenses and revisit contracts, you might find some unnecessary bills that could be reduced or even eliminated.
- Assess Employee Productivity
Productive employees can elevate office moral and boost income, whereas poor employees reduce office productivity and bring down the mood. A thorough assessment of current employee productivity can provide insight to what your business needs. Ask yourself and your employees what you can improve upon for better business outcomes. You may find that your employees need better equipment or more training to do their jobs more effectively. Investing in your company’s staff and technology might seem expensive in the short term but can provide substantial savings over time.
Summer is the perfect time to reflect on the first half of the year and think about what could be done during the second half. Forecasting the rest of the year can help you cut waste within your organization and prepare for a prosperous future. Consider the following when forecasting for your business:
- Past, current, and new income sources
- Known future revenue loss
- New employment needs (staffing, training, promotions, etc.)
- Pending large-item purchases (machines, computers, printers, vehicles, etc.)
- Major building repairs
- Change in office space
Accurately and honestly evaluating expenses and income sources will give you a good view of your current financial situation. When you know how much income is coming in and what expenses are going out, you can accurately plan a budget for the rest of the year. Large business purchases and investments in your employees have their advantages come tax season.
3. Consider Retirement Contributions
We don’t need to tell you how important it is to save for retirement and your future; however, we do want to tell you how beneficial it can be for your current financial situation. When you contribute to a retirement account, you lower your current taxable income, potentially reducing what you need to pay in taxes each year.
There are several different types of retirement accounts, and each has its own benefits, drawbacks, and rules. A tax professional can help you determine which account type is best for you and your business and how much you should contribute each year to the account in order to maximize its benefits.
4. Meet with a Tax Professional
Set up a mid-year business check-in with a certified tax professional to evaluate the health and status of your business. Some things you could discuss include:
- Business Set-Up
Is your business incorporated? Updating the nature of your business entity can have numerous tax benefits for small business owners.
- Your Business Status
Discuss your business status with a tax professional. They will be able to advise you on when it makes the most sense to make big purchases and how those purchases could benefit you come tax season.
- Estimate Taxes
Determine how much money you will need to pay in takes for the remainder of the year to help prevent underpayment and overpayments. You can avoid penalties from not paying enough to the IRS. And since you won’t overpay, you can more effectively use your money.
S.H. Block Tax Services
The four suggestions listed above can help keep your small business on track and organized. If you have past-due taxes or need assistance navigating IRS compliance, contact S.H. Block Tax Services for a free consultation at (410) 872-8376 or completing the brief form on this page. We are committed to achieving the best possible financial positioning for you and your business.
Contact us today to start the process!
The content provided here is for informational purposes only and should not be construed as legal advice on any subject. Please read our full disclaimer here.