December 31st is just around the corner. It’s time to gain a holistic view of your small business 2013 taxable income so that you can prepare yourself for filing your corporate tax returns. As a small business, it can be difficult to know where to start. In fact, you may be tempted to put it off until the only options are to hire a tax preparer or make a dangerous slap-dash attempt at the forms. Incorrectly filing your taxes could lead to significant problems down the line, including audits, penalties and allegations of fraud—even if the fraud is unintentional.
The only way to avoid the possibility of these problems is to gain a complete picture of the 2013 taxable income for your small business by the end of the year. This will provide you with some time, before tax season actually rolls around, to ensure you have the necessary capital and all the correct paperwork to pay your taxes correctly and efficiently. Allocating a little time today to prepare will make filing on March 15th less stressful for you and those around you.
Your Small Business 2013 Taxable Income
Here are four easy steps that you can take to prepare your small business 2013 taxable income picture:
Step One: Gather your bank statements. Your bank statements should provide a clear and concise picture of every income and expenditure your business has accumulated over the past year. Review your statements for accuracy. Understanding where your cash comes from, where it goes, and at what intervals can help provide the most complete picture of your total income and expenses for the year. Many business expenses, especially for small businesses, can be translated into tax deductions. It’s a great idea to make a list of these potential tax deductions while you have your bank statements handy.
Step Two: Establish a balance sheet. Your businesses balance sheet is the statement of financial position. It provides a single snapshot of your assets, liabilities, and ownership equity. Whether you use a program such as Quickbooks or a simple spreadsheet, a balance sheet will help you not only see the entire financial picture, but also help you keep track of them in the future. Organization leads to better business practices and fewer costs in the long run.
Step Three: Create a profit and loss statement. This document, based on the information gleaned from your bank statements and balance sheet, will provide you with one solid number. This is your net income, and is the money that you will be taxed on. The most important part of filing taxes is to provide adequate documentation for all of your money, both as it comes in and leaves your business. These three steps can help you get organized and prepare your business for the 2013 tax season.
Step Four: Get ready for next year. Having just compiled all of the information necessary for this year’s taxes, learn from this experience to become better organized next year. If your money is spread across more than one bank account, consolidate it. If you had trouble remembering what money was spent where, create an organizational system that allows you to document your expenses as they happen. Taking small steps now is the key to making this process less time consuming in the future.
The key to long-lasting success is always knowing where your business stands financially. As your business grows, it’s critical to have the right team in place. I can help you find the right accountant, bookkeeper, or other financial personnel by working with you to identify the necessary skills, knowledge, an attributes of a successful financial role. How can I help you prepare for success this year and beyond? Contact me today and we’ll get started.