Few business owners look forward to tax season, in fact, many dread it.
Without a tax strategy in place designed to organize your taxes throughout the year – instead of in March and April as deadlines loom – tax season typically becomes one mad scramble to get everything submitted accurately, and on time.
But by working with tax services in Coral Gables, business owners can make a series of small, proactive decisions every month, that make tax season far more manageable, and effective.
If a year-round tax strategy is new to you, here’s a brief guide to what you should be doing, month on month:
1st Quarter (January – March)
Reviewing, resetting and filing
The first quarter is all about closing the previous tax year and making way for the new one. Begin by gathering income statements, expense receipts, 1099s, and mileage logs. Check your tax position last year to see if you might have missed any deductions, or paid penalties for underpaying on estimates, that you don’t want to repeat this year.
Deadlines to be aware of:
- 15th March – time to file or extend for S Corporations and partnerships
- 15th April – time to file for sole proprietors and single-member LLCs
- 15th April – the first quarterly estimated tax payment for the year is due
2nd Quarter (April – June)
Adjusting and aligning
Once you’ve filed or requested an extension, you’ll need to start thinking about the current year. The 1st quarter’s estimated payment is due in the middle of April, and the 2nd quarter’s is due in the middle of June.
This is the ideal time of year to compare where you expected to be, with your year-to-date income, and to carry out a mid-year tax checkup. With the help of your tax accountant, you may be able to identify some new deductions you may be eligible for.
3rd Quarter (July – September)
Mid-year check-in
As July begins, you’ll have six months of data to work with, and you can begin by comparing your projections with your actual data, and making any adjustments that your tax expert feels necessary. You should also evaluate your existing business structure to find out if it’s still the most tax-efficient option, review retirement plan contributions (if you’ve made any), and check if your payroll tax withholdings are accurate.
Engaging with a tax expert at this stage of the year is particularly useful.
4th Quarter (October – December)
Year-end position
At this time of year you have a rough idea of your income for the year, and still have time to make changes to your taxable income before the end of the year.
Confirm that all of your record-keeping is up-to-date and reconciled, and talk to a tax professional about any specific tax moves you may be able to make before the year-end.
When should you start working with a tax professional?
If the following scenarios resonate with you as a small business owner, it could be time to bring in a tax professional:
- Your income has grown, as has your tax liability
- You have employees or contractors and need to be payroll compliant
- You’re not sure if your existing entity structure is still as tax-efficient as it once was
- You suspect you may have missed out on deductions the previous year, or filed late
Small business taxes can quickly become complex as the company grows, and many business owners wish they had consulted with Coral Gables accountants at an earlier stage.
Engaging with a tax professional throughout the year helps financial decisions be made at the right time; avoiding a mad and stressful dash to meet deadlines on April the 15th. With just a few small habits, such as properly tracking expenses and reviewing your position on a quarterly basis, you can make real savings that more than cover the cost of your investment in professional tax services.