It’s That Time of Year Again – TAX TIME!
And guess what? I’ve been working with clients who have been turning their numbers over to their tax accountants starting the middle of January!
Do you dread January, February, March – and beyond – because those months seem to turn into “Franken-tax” time? Are you asking yourself:
“How do they do it? How would it feel to be TOTALLY DONE with tax-related chores by the middle or end of January?”
If you’re wondering how, here are some “Tylenol Tips” to help you lay out a plan so that YOU TOO can move into a pain-free, no-surprises zone as soon as possible!
AVOID Tax Surprises – How To Predict Your Annual Tax Bill
Unanticipated tax bills can be very painful! A far better alternative is to use the following steps to (roughly) anticipate your tax costs as you progress through the year.
1. Make your “estimated tax payments” on time – and in the amounts designated by your tax preparer.
Your tax adviser has computed your estimated tax dates and minimum amounts due based on your prior-year tax cost so you can avoid penalties. Note: Be aware that those amounts may, or may NOT, be enough to cover all of your taxes for the current year!
2. Create a realistic, account-based budget for your company.
3. You’re going to meet those current-year estimated income projections, right? If so, be sure ask to your tax adviser to also estimate your various upcoming tax obligations (amounts greater than the “automatic-non-penalty estimates” discussed in #1 above) so that you’ll be prepared for the additional tax costs.
4. Keep ALL of your entries into QuickBooks up to date.
This means daily, weekly, or (at the very least) monthly data entry. (If you need help learning how to do this, check out these online QuickBooks training classes.)
5. Perform month-end closing procedures to be sure that your reports are accurate.
6. Compare your actual year-to-date results against the budget on a regular schedule (e.g., at the end of each month or quarter).
Are you ahead of planned income? Are you behind? If you are significantly “off base,” it’s time to request a new tax projection.
TIP: The extra income and cash flow that generates higher tax requirements can quickly disappear. You may find it extremely difficult to unearth the money when “the tax-man cometh!” Either remit more to the government as you go, or set aside those extra funding requirements right away.
Get “The Ball Rolling” Sooner!
7. Be sure to reach out to your tax advisers in November or early December.
The one thing you DON’T want to hear from your tax person in January or February is:
“Gosh Pat, I wish you would have contacted me last November. I could have saved you a boatload of money! Of course, now that we’re past the end of the year, there’s nothing I can really do about this…”
Tax laws change, and your company changes. That’s why you need to set a pre-year-end meeting to review your current year’s results. Your advisers may be able to provide some new tax-saving strategies.
8. As soon as your taxes are complete, request your adjusting entries.
With a cleaner year-end close, and taxes finished (likely in February or March! Woohoo!), you’ll be able to ask your tax preparers to provide you with any prior-year adjusting entries. After you (or they) make the entries, you’ll be able to see your true, FINAL results for the prior year. Breathe a deep sigh of relief! You’ve successfully completed another year; you’ve done it!
9. Create a checklist or add the steps shown (in this post) to your calendar.
Given what you know about YOUR company, you may want to add these steps into your monthly checklists or add them as reminders to your calendar.
Detailed steps for “how to prepare for tax time” is just one of the types of information we share in our Construction Accounting & Management Program (CAMP). If you want to begin using QuickBooks to its full potential, or if you want to become smarter, better, and faster with QuickBooks, I invite you to check it out!
There you have it – a total of nine ways to take the pain and suffering out of tax time…
Two MORE Benefits You’ll Experience
One of your primary business goals should be to create a clean, reliable, useful set of management and job-cost reports every month. If you’re currently achieving that goal, you’re likely already experiencing a boatload of operating and financial benefits.
By adding the steps listed above into your current procedures, you can now envision how you’ll feel when…
Your information is ready to hand off to your tax person before (almost) everyone else.
This means that your return won’t be stranded in “perpetual tax extension hell.” No more tax returns hanging – and hanging – and hanging – waiting to be addressed.
Your year-end nightmares disappear.
Relax. Take a deep breath. An orderly, recurring, monthly process means that year-end, from your side, has become sooooo much easier and simpler…
How Does This Apply to You?
- Are you a company owner who wants to know more about your company’s financial results on a day-to-day basis? Are you tired of having to wait until next August or September to see how last year turned out? And how much you owe in taxes?
- Are you a bookkeeper who’s tired of feeling under-trained and overwhelmed?
- Are you a tax preparer who wishes (especially at tax-time!) that your clients would provide you with a nice, tidy, well-organized set of results? Are you tired of getting QuickBooks files that leave you wondering what your client did? And how long it’s going to take to convert those numbers into a workable format?
At Info Plus Accounting We DON’T Provide Tax Services!
Instead, Our Mission Is to Empower Small & Mid-sized Businesses Learn
- Structure their internal accounting and control systems.
- Enter, check, and understand their numbers to yield
- Reliable, timely, and useful management information throughout the year.
We have developed support tools designed especially for companies within the construction industry. One of our most popular programs is the previously noted Construction Accounting & Management Program (click on the picture to the right to learn more).
If your needs match up with our mission, we believe you’ll find this online training program to be of exceptional value!