The tax man rapidly approacheth and you’ll want to be prepared unless you want the audit team hot on your trail. The best advice anyone can give you for starting a new business in the New Year is to start preparing early. While you may not have much to report this year if yours is a brand new business, you will want to keep your affairs in order all year long to make next year’s tax time a breeze. Here are a few things to think about as you set out to get your accounting and taxes in order just in time for 2014.
Separate Your Accounts
Accounting and taxes will become infinitely easier if you separate your bank accounts according to personal and business use. Whether you use a checking account for your business, a line of credit, a credit card, or all of the above, keep your charges separate to avoid confusion in the future.
Get a manila folder and label it ‘2014 accounting and taxes’ and put every receipt you use for your business between its covers all year long. Gas receipts, major purchases and even minor purchases like paper – include everything. If you are ever audited, the IRS will want to know what you spent your money on, especially if you are claiming any large deductions. Keeping receipts will keep the tax man at bay, and it’s always a good idea to keep receipts anyway just in case of things like bank errors or identity theft.
If your goal is to make it so that you can run your business without even really thinking about accounting and taxes, get a good software program that will handle everything for you. There are even online software programs that will automatically sync with your business bank accounts. You can then label each purchase and expenditure and run detailed reports that will make even the most hardened accountant smile from ear to ear.
Hiring an Accountant
If you want to make 2014 accounting and taxes really easy, hire an accountant. You can expect to pay $100+ for expert accounting services. Even if you use software, it is recommended that you let a professional handle your accounting and taxes. Simply generate the reports that the software provides and hand them to your accountant; and always be organized.
Accountants love clients who are organized. If you talk to your average accountant, they’ll tell you that some clients come in with shoeboxes full of receipts and their papers in boxes, but not in order. Don’t do that. To remain on your accountant’s good side and to make accounting and taxes something you hardly have to think about, keep your receipts in order, keep your paperwork organized and present the entire bundle in a nice folder to keep things very simple.
If you were to work for an employer, you would have taxes taken out of your paycheck every month. Since you won’t be working for anyone else as a new business owner, you will need to be responsible for paying your own taxes. If this is your first year in operation, you may not have that much tax to pay. Next year will most likely be different.
The IRS expects you to pay taxes on all the money that you earned. You are allowed to take certain deductions, but any deductions that you do claim will be watched heavily by tax experts. This is why hiring an accountant is highly recommended if you want to avoid complications during 2014 accounting and taxes season.
An accountant will know exactly which deductions you are eligible for and will be the one to answer to the IRS if anything comes up foul. Keep in mind that you can still get in trouble even if your accountant was the one handling your accounting and taxes. This is why it is imperative that you hire a reputable accountant that comes with plenty of reviews and testimonials to back the service up.
Accounting and taxes represent two of the most loathed subjects any business owner could probably ever talk about, but they are necessary subjects if you want your business to be successful and well within the law. Once you get your tax bill, if you do in fact owe taxes, you can pay quarterly or yearly to pay off what you owe. As long as you remain organized all year round, you hire an accountant you can trust and you pay your taxes as you’re supposed to, you’ll find that accounting and taxes are an unfortunate but easily managed part of starting your own business.