Have you ever found yourself wondering how do I prepare for my taxes? It’s a tough job navigating the taxes scene, which is why so many businesses and even individuals enlist the help of an accountant to handle all things tax-related. However, if you’re trying to get some of the work done on your own dime and time, you can learn a little bit about how tax preparation works!
Tax Prep 101: The Basics
Having a professional handle your tax preparation is a great asset to have, but it’s not your only option. You can choose to do this part yourself to make it easier on your accountant or advisor. Most of tax prep is just organizing, sorting, filing, and double-checking everything. You need to be comfortable with math and numbers and data-entry, especially for larger companies.
Without tax prep, anyone who handles your taxes at the end of the year, be it yourself or a CPA from our firm, or elsewhere, a big mess will be what is presented. A messy filing system and poorly organized documents can be time consuming and dangerous. There is more room for numerical and mathematical errors, as well as important information being lost or overlooked. These mistakes could leave you in bad standing with the IRS, and has the potential to derail your company’s financial goals for the year.
Good tax prep services will also help you maximum post-tax income and revenue, and show you where you can make general improvements to the way taxes are handled within your company. You may be missing out on big benefits that could bring extra saved expenses right to your pocket!
Gather All Of Your Information
First and foremost, you need to make sure you have all of the related documents easily accessible. Throughout the year, you may need to do double checking, or your accountant will need to see certain statements. W-2 forms, statements of debt or investment, tax documents and receipts, all proof of income, and more will need to be worked on and prepared. This is the biggest part of tax prep.
Itemize Your Deductions
Every business will have deductions. Make sure you’re tracking these, and have the applicable receipts or proof in case of an audit. A tax prep expert can help to ensure you’re itemizing everything correctly, and that you’re not missing any allocations for deductions.
File Income Adjustments & Predictions
All of the money you or your business makes should be recorded and properly filed. These numbers are crucial to an accurate tax filing and returns. The IRS does check this. You need clear statements and a functional filing system so these documents are easy to find and put onto tax reports and forms. Your accountant will also need access to this for all financial aspects of your business. Clean bookkeeping is key to a successful tax season and financial gain within a company. That is why tax prep is so important – it focuses on accountability and organization for success.