Top 10 Tips to Be Tax Ready Next Year

Zhenya Grinshteyn —  April 1, 2010 — 2 Comments

Guest post By Mark Cummins, CPA

With two weeks until the April 15th tax deadline, will you be ready to file taxes on time and without any issues? If you’ve found yourself scrambling to do your taxes this year, making yourself and your tax professional crazy in the process, here is a top ten list of suggestions to make taxes next year a smoother process. By starting on a solid tax strategy now, you will be rewarded with less headaches and bigger deductions next year.

  1. Use your credit or debit card for all business expenses – The IRS allows copies of credit or debit card statements for itemized proof of business expenses. Link the card with your Expensify account and get eReceipts for most expenses under $75, then capture receipts for big ticket items with their mobile app. It’s still good, however, to keep the receipts for very large purchases so file them away after you snap a picture.
  2. Use one bank account for business – Open up a business checking account and run all of your expenses through it. Try to find a bank that has online banking, allows you to download transaction history in OFX or QFX format, and stores 7 years of statements, including check images.
  3. File receipts immediately – A lot of deductions are lost due to missing receipts and documentation for the expense. Install any of Expensify’s mobile apps to take pictures of receipts as you get them. If you have a smart phone that is yet to be supported, simply snap a picture of the receipt and either email it or upload it to your account at first chance.
  4. Organize your records – Make sure to group all of your expenses and their receipts in to categories like meals and entertainment, office supplies, travel, etc. If you’re not using Expensify to organize your expenses, keeping receipts sorted and categorized in manilla folders is the next best thing. Keeping your tax records in one place will save hours of frantic searching at tax time (and help you if the IRS comes knocking). Remember, when it comes to taxes, being organized is your friend!
  5. Log your miles – If you use either the standard mileage deduction or actual costs for vehicle expenses, log your business miles as they happen. Enter in the stops on your trip and Expensify will calculate the mileage expense for you or pick up a calendar or mileage log at your local stationary store and write them in manually. Whichever way you track mileage, make sure it’s easy to add up and compute at years end.
  6. Do monthly profit and loss statements – Often small business owners fail to “keep the books” on a regular basis. With all the bookkeeping software available there is no reason for you, or a hired bookkeeper, not to keep your books on a regular basis. QuickBooks is free to try and a good place to start. If you found a bank where you can download data, often you can organize and then upload your transaction history straight into your bookkeeping software.
  7. Use a payroll service – Most payroll services offer special rates for small business owners, often at less than $50 per month. They will deduct all of the necessary federal and state taxes and then direct deposit your “net paycheck” into your personal account.
  8. Perform a mid-year tax check up – Small business owners often fail to make proper estimated payments during the year, and then come up short on Tax Day. Contact your tax professional and estimate what your net income will be at year end based on how you are doing mid-year. Teaspiller provides online tax prep help. Teaspiller allows you to import all of your data from Expensify, and other popular small business tools, so you can have an accountant review everything without ever having to step foot inside their office. They’ll calculate your estimated tax liability and give you an idea of how much your quarterly estimated payments should be.
  9. Keep a “Perm File” – Have a file box with your most important papers like homeowner’s policies, auto purchase agreements, loan documents, and business agreements, in one place. You may never need this come next April 15, but you’ll be glad you have it organized if you do.
  10. Make a note of itemized deductions and credits – There are many standard deductions you can claim, which reduces the total income that can be taxed. Standard deductions may include child care costs, education costs, interest on your mortgage, charitable donations, and more. Find out which deductions you are eligible to claim and keep track of them in a separate expense report which you can hand to your tax professional.

Mark Cummins, CPA has over 20 years of experience in tax, accounting, and systems areas. He has extensive experience with the IRS Tax Court and manages a private CPA practice in Los Angeles, California. He’s also an expert available for help on Teaspiller, an online tax platform that allows small business owners to get help from tax experts around the country without ever leaving their office or home. Visit his profile at: http://www.teaspiller.com/mcummins.

Click here for more tips and information on how Expensify and Teaspiller can help you come tax time next year.

2 responses to Top 10 Tips to Be Tax Ready Next Year

  1. 

    Awesome post as usual, thanks for writing such informative stuff on a regular basis.

  2. 

    This blurb really saved me much time from all the searching I would have needed to do!

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