As area residents continue to march through March, there is much to look forward to: Daylight is lasting a bit longer in the late afternoons; spring training in Fla. may begin soon (depending on contract negotiations); and summer rentals at the Jersey Shore are disappearing quickly. But there’s a dreaded task looming: tax day.
This day of reckoning is something area households and businesses must both navigate with a high degree of precision.
Errors on personal tax returns can be costly. Errors on corporate tax returns, especially those from small businesses, can be devastating. And the list of transgressions goes beyond math errors and typos.
The Internal Revenue Service can ding business filers for failing to file, failing to file on time, failing to pay on time, and paying incorrect amounts.
Penalties are often hefty. For example, if a business fails to file, the IRS assesses a fee equivalent to five percent of unpaid taxes. For a mom-and-pop along Main Street in Doylestown, an IRS penalty like this could deal a heavy blow.
Tax season doesn’t, however, have to signify terror and distress for small business owners. With proper preparation and the right tools, management can take care of taxes in short order and have their business ready to roll through the rest of 2022.
Here are a few steps that can make this possible.
Review Last Year’s Documentation
One step to smooth the process is to use the 2021 expense report as a guide. Business owners can use this information to review their expenses from the previous year and save time this year. To that end, it can also be a useful step to ensure management doesn’t forget to mark any repeating expenses.
Use Accounting Software
Accounting software is becoming more common today, but not all small businesses are putting these tools to use. These programs can make tax season much easier, keeping track of billing, income, expenses and, in some cases, deductions and inventory. This happens in real time, helping small business owners avoid a scramble to gather information during tax season. The technology not only saves time but also reduces the opportunity for human error.
Review Financial Statements
Small business owners will also want to review their quarterly financial statements so they can have a general idea of what their upcoming tax liabilities might be. This enables business owners to better plan and keep track of their finances through the first quarter of 2022.
A Trusted Ally
While tax season may not be the most wonderful time of the year for small businesses, by taking the time to adequately prepare, management can find the task less onerous. By employing accounting software and reviewing company records, business owners will be able to accurately keep track of their finances and spend less time sifting through the tax system, opening more opportunities for growth and development.
Firstrust Bank offers extensive services to small businesses in matters related to taxes and all other aspects of finance. For information on how its professionals can assist your commercial endeavor, visit the bank’s website.