They say that the two things you can always count on are death and taxes. While the realities of tax time are nothing to joke about, they are something to plan for, especially in business. Mismanaged tax obligations can dismantle an otherwise well-loved and successful enterprise.
Get ahead of yearly taxes by integrating financial tools, controls, and best practices into your business. With a well-planned strategy, you can make tax time simple, straightforward, and perhaps the most predictable part of your business.
1. Automate Financial Management
Gone are the days of spiral bound balance sheets, but many businesses are still running their finances in Excel. While spreadsheets certainly have their place, they don’t capture the whole picture. Use accounting software to automate, bookkeeping, track expenses, and create invoices.
Look for accounting software that’s cloud-based which can help teams access critical data no matter their locale. Cloud-based systems can help manage financial data and storage, and are easy to access for distributed teams. This helps your employees collaborate using up-to-date information, which can reduce rework and confusion. Some options also include tax filing integration and sales tax automations, ensuring compliance and on-time payments.
2. Track Expenses in Real Time
One of the most common challenges in tax filing for both businesses and individuals is documentation. Without a record of an expense or payment made, tax filers are at risk for an audit. Even if an audit doesn’t result in additional fees and penalties, the audit process is complex and time-consuming. Keep clean records by tracking expenses in real time across your organization.
Basic business expenses may be managed digitally, but others still require hard-copy receipt tracking. If your sales team is traveling and needs to buy a replacement charger, they’ll need to turn in their receipt. After you’ve reimbursed them for this expense, you’ll need to keep track of where this sits in your business expenditures. Use an expense tracking app across your organization to quickly capture expenses, and proof of purchase. This way, you won’t be tracking down months old paper receipts, which can easily be damaged and lost.
3. Streamline Payroll Processing
Changing payroll providers may not be for the faint of heart, but modernizing your process can be a game-changer. Payroll processing has advanced in recent years, allowing businesses to provide employees and finance teams with a better experience. Some providers integrate benefits, enrollment, performance management, and even employee engagement. If your current software stack doesn’t include these features, consider what might make sense for your operations and employee experience.
Many tools also include helpful tutorials and forecasting for employees to project their own tax obligations. Good tax management and accurate withholding can ease financial stress for your employees, making it easier to focus at work. Your software can also automate routine tasks and improve efficiency, leaving more time for value-added tasks.
4. Coordinate With Your Tax Preparer in the Off-Season
The first four months of the year may be “go-time” for tax experts, but the months following represent big opportunities. Set a meeting with a tax expert in the off-season to discuss opportunities to improve your processes. There may be better ways of managing your regular deductions, expenses, and investments. Learn what you can implement now and how you can prepare for the future. Plus, there may be local, state, and federal tax credit opportunities that you can qualify for.
Gaining an understanding of potential credits can help guide business growth, and investments. Many states have prioritized small business support and offer grants for workforce training. Collaborate with your tax preparer and clarify the requirements to qualify for tax savings opportunities. Take this data back to your team to determine if it’s worth exploring and use these requirements to guide implementation. Doing so can result in major tax savings and spark business growth, better recruitment, and improved employee retention.
5. Integrate Time and Job Tracking Methodologies
No one loves to work for a micromanager, but clarifying how your company tracks work is essential. Ideal for service based businesses, time tracking and job management helps improve financial accuracy. Determine a method of labeling each job with a naming or number convention. Align this methodology across all systems like payroll, time tracking, and even your digital filing system.
Keep robust records highlighting your chosen naming convention is to be applied for customer jobs. Train your team and reinforce this method regularly, holding each other accountable and responsible for using it consistently. By establishing this methodology, you can easily identify jobs across systems and track taxable and non-taxable activities. Additionally, you can identify areas of business growth and opportunities while providing helpful reporting for your team.
Remove Doubt from Tax Season With a Plan
Knowing what to expect clears your mind to focus on growing your business and supporting your team. Elevate the importance of strong, financial management and tax preparation for yourself and your leadership. Reserve time to train your team on new software, tools, and expectations set for them. Work with vendors to provide virtual and hands-on training to ensure your team is equipped to use them successfully. With the right training, tools, and procedures, you’ll save time, manage tax obligations, and protect your business’s future.
