How to Prepare Your Business for Tax Season

Organize Financial Records
Gather all your financial documents, such as income statements, receipts, and expense reports. Ensuring that these records are in order will help streamline the filing process and make it easier for your accountant to spot potential deductions.

Update Your Bookkeeping
Make sure your bookkeeping is accurate and up-to-date. Double-check that all transactions are recorded correctly and that your accounts are balanced. Consider using accounting software for automation or hiring a bookkeeper to handle this for you.

Separate Personal and Business Expenses
Mixing personal and business expenses is a common mistake that can complicate your tax filing and risk IRS scrutiny. Be diligent about separating expenses and use business accounts exclusively for business-related purchases.

Understand Tax Deductions and Credits
From office supplies to travel expenses, there are many deductions available for business owners. Working with a financial professional can help you maximize these deductions and identify any credits that your business qualifies for, such as research and development credits.

Review Payroll and Employee Benefits
Ensure your payroll records are accurate and compliant with IRS guidelines, as incorrect payroll data can lead to costly penalties. Review employee benefits for potential tax advantages, like contributions to retirement plans or health savings accounts.

Plan for Estimated Quarterly Taxes
Businesses often need to pay quarterly taxes to avoid underpayment penalties. Reviewing estimated payments with your accountant ensures you’re paying the right amount throughout the year.

Meet with Your Accountant
Before tax season, schedule a meeting with your accountant or financial advisor. They can review your financials, advise on tax-saving strategies, and help identify any areas of concern. At Brookfield Financial, our team specializes in working with businesses to make tax season less overwhelming and more advantageous.

Consider Tax Planning for Next Year
While you’re preparing for this year’s taxes, it’s also a great time to consider next year’s tax planning. Implementing strategies now, like adjusting your payroll deductions or increasing retirement contributions, can make a big difference.