When April 15th rolls around, unless you have been granted an extension, the IRS demands that you have your taxes ready, sent and received by their office. The agency is not flexible on this and will come down hard on any tax evaders. Even if you skip just one tax season, you could get audited and that could result in fines that you probably can’t afford to pay. The IRS will set you up on a payment plan, but you should be prepared to pay interest and late fees if a payment ever comes in past the deadline. It is no secret that the IRS is not the most fun agency in all the land and their agents are cold, calculating, smarter than you and ready to find any discrepancy to take your life savings, your kids’ college fund and even the cash you keep buried in the back yard for everyday emergencies. In a perfect world, there would be no IRS and that is how you should live your life; just forgetting that the IRS exists. Here is how you can prepare your taxes properly and always on time so that the tax man will never cometh your way.
The first rule of preparing your business taxes each year is to keep all of your receipts, invoices and any other document that lists a payment or expense. Many people hand their CPAs lists of numbers with no proof that those numbers originated from everything. If the amount on the list can be cross-referenced with the receipt where it originated, your CPA will be satisfied and so will any IRS agents who happen to come snooping around.
The lesson is to never throw away receipts. Keep them in a file cabinet and separate your invoices and receipts, monthly if possible, so that your CPA has an easier time going through them.
Hire a CPA
A certified personal accountant doesn’t cost as you much as you might think and the professional you choose will always make sure you are on time for tax season. Their business solvency depends on it. When you put the motivation to do your taxes into the hands of a true professional, you can bet that the CPA will stay on top of you to gather all the necessary documents and have all tax information to his/her office in a timely manner.
The best part about hiring a CPA, however, is that you really don’t have to do a thing other than focus on running and growing your business while your personal accountant works on your taxes in the background.
Doing Your Taxes Yourself
If you are reading this thinking that there’s no way you are going to hire a CPA to do your taxes when you can do them yourself, keep in mind that there is much more to doing your taxes than simply filling out tax forms. CPAs are paid to know where the best deductions are. With the proper accountant, you might pay less to the IRS than you would if you tried to do your taxes yourself. More importantly, with the right CPA you might get much more in returns on your taxes from the IRS. While it is possible to do your business taxes on your own, it is not recommended.
If you are stubborn like that, you understand tax law and you know how to fill out the forms, by all means do your own business taxes. Just don’t make the mistake of taking too many deductions. Many business tax do-it-yourselfers are so adamant that they can find just as many deductions as a certified personal accountant that they end up going overboard. This can send a red flag to the IRS and that is just the thing to do if you want an agent knocking on your front door. If the deductions are legitimate, then list them. Even if you are audited; if you have proof of the legitimacy of those deductions, you will have nothing to hide and an audit will be unlikely to result in any penalties. Though you never really know with the Internal Revenue Service.
Whether you are doing your own taxes or you have a certified personal accountant doing them for you, set reminders on the fridge, in your phone, next to your bed or taped to the bathroom mirror reminding you to prepare and pay your taxes on time. You may pay them quarterly, bi-yearly or every single year, but you must keep up with preparing and filing if you want to remain in the IRS’ good standings.