Follow These Tips To Properly Prepare For Tax Time

For most people (especially business owners) tax time is certainly not the most wonderful time of the year. While many people dread April 15, with the proper planning and resources, tax time does not have to be that bad. The key is to spend extra time preparing for tax season well in advance – ideally long before you even get your income statements in January.

By planning ahead and contacting the right people, you can minimize your payment, maximize your return, reduce the risk of audits and generally make tax time much less stressful. If you are wondering what preparations are necessary, read further. This article will serve as a step-by-step guide to preparing for tax time.

Make Sure You Are Prepared For An Audit

Audits certainly don’t happen to everybody, but they can happen to anybody. For this reason, it’s important to be prepared.

Preparing for an audit means keeping track of all of your financial documents from the past year, as all of them could be called into question. If this sounds like an impossible feat, don’t worry: there’s help. Find a CPA or business consultant who provides audit services, and you will have the help that you need. A CPA can consult with you before tax time, to help you minimize your chances of being audited, as well as prepare you in case it does happen. If you get audited, the CPA will also be able to provide guide you through that stressful process of preparing and filing business taxes.

Make Sure To Get Your Taxes Done As Early As Possible

Sadly, many people wait until the very last minute to get their taxes done. Such procrastination can cause unnecessary complications. It’s always best to get your personal taxes filed as quickly possible. Most employers have until Jan. 31 to send out W-2s and other financial paperwork. This gives employees three months to file. Instead of waiting until that timeframe has almost passed, start the filing process in February. You don’t have to do it all in one day, or even one weekend. The important thing, though, is that you work on your taxes steadily, and as soon as you can. Then, if you’re expecting a refund, you will get it sooner. And if you owe money, you can rest assured knowing that you did not miss the deadline. Getting everything done on time will give you great peace-of-mind.

Set Money Aside For Taxes

If you withhold so much each year that you get a return, great! This is almost like saving a portion of your paycheck every month. If you end up owing money, or you have done freelance work or independent contract work that you will need to pay taxes on at the end of the year, it is a good idea to set some money aside each month. This way, you are not scrambling to come up with the money by tax time. After all, why put yourself through that headache if you really don’t have to?