3 Fall Bookkeeping Tips to Prevent IRS Headaches
Taxes and IRS Headaches
Nobody Likes dealing with the IRS, mainly because nobody ever likes to deal with taxes. The system is labyrinthine and often confusing. It changes regularly, adding new taxes, removing old ones, making minor changes to existing codes. Somewhere in all of this is the intent to make the system more efficient, but the end result never feels that way. To help out, here are some tips to keep yourself from having IRS headaches this tax season.
1. Plan Ahead
You need to have your taxes filed by April 15th. If you apply for an extension, the very latest you can extend it to is usually on October 15th. While this seems like a long way off, time goes by quickly and it’ll be here before you know it. Furthermore, there’s always a rush come January. Everybody decides to start in January, right after the year’s end, hoping to get things done early. While it’s a good idea to get ahead, because everybody starts filing at the same time, this often bogs bookkeepers down. It becomes difficult for them to keep up with the demand and you may find it difficult to find a bookkeeper who’s available if you can’t afford to keep one on staff all the time.
That’s why it’s good to start planning for it now. Meet with your bookkeeper in advance and start the process of collecting your tax info in the fall. You can get the bulk of the year straightened out well in advance, and then make a monthly game plan that will speed up completing the process after the year has ended. With some good planning and a skilled bookkeeper, you might be able to have your taxes done by the end of January instead of waiting until then to get started.
2. Watch Out for the Extension Trap
Sometimes, things just get in the way. A sudden shift in your business can change how your taxes need to be filed, forcing you to take some extra time to recalculate them. Other unforeseeable events can also make filing on time difficult. For this reason, the IRS can offer extensions on your due date. The IRS usually automatically grants extensions when asked for, whether or not a good reason is provided.
That said, it’s best to avoid taking extensions whenever possible. Once you get in the mindset of putting things off, it’s easy to keep procrastinating. Instead of getting on top of things, you could end up putting your taxes off until near the deadline, leaving you rushing to catch up later. This adds more stress to your life instead of easing it. Furthermore, filing for an extension only gives you an extension on filing your taxes. It doesn’t give you an extension on paying your taxes. While an extension can ease any fines or fees, the IRS still charges for paying late.
On top of that, once you get in the habit of filing for extensions, it can be really hard to get back on time. You’ve already delayed as much as possible, right to the very end, and as soon as you’ve got it all filed, it’s time to immediately start pulling information to file again. You’re exhausted from the work, though. You figure it’s okay to wait for a little bit to give yourself some time to recover. Then you suddenly you realize it’s time to file again, but you’re not ready. You ask for another extension and the whole problem repeats itself. Better to get on top of it now and not have to worry.
3. Know Your Reports
Whether you’re a small business, large business, or just starting out, you may need to adjust your categories on your profit and loss statements. There could be new tax laws and new write-offs that you need to factor in. Knowing your reports and your categories can save you money. Meet with your bookkeeper to become familiar with these. Regular meetings will help you keep up to date on all your tax records, saving you a lot of headache and confusion when it comes to file with the IRS.
Here at Dragon Financial, we’ve got over 20 years of experience with filing taxes. We keep ourselves up to date on all the tax codes so we can get the filing done quickly. We save you time, money and headaches. We’re always free to assist you, so get in touch with us today. We’ll take care of the hard stuff and let you focus on what you do best: making money.