Tax preparation should not be limited to just the tax season if you own a small business. If you wait until the tax season to prepare, you could end up struggling to finish before the filing deadline. Here are some tips to ensure that your business is on-track year-round. 

Back Up Records

Chances are, your business has electronic records. Unfortunately, disasters can happen, and if your records are not properly backed up, you could lose important records that are needed to file your taxes. To avoid this situation, you need to ensure that your electronic records are backed up on a routine basis. A good way to do this is to have your records automatically saved in the cloud daily. You can also opt to save the records to a thumb drive. 

Avoid Blurring the Lines

Some small business owners accidentally mix their personal financial records with their business records. As a result, they have to work overtime to separate the two when it is time to file taxes. 

It is important that you do not blur the lines between your personal and business records. Without a clearly drawn line, the Internal Revenue Service could regard your business as a hobby instead of an actual business. This could mean an increased tax liability because many of your business expenses are not deductible if your business is labeled a hobby. To avoid this confusion, keep separate records. 

Remember to Track All Transactions

You obviously know to keep track of your sales and large expenses, such as leasing office space, but it can be easy to miss the small transactions. Smaller financial expenses, such as purchases made with petty cash funds and magazine subscriptions for the business, should not be overlooked. At the end of the day, they could possibly total up to a much-needed deduction. Keep track of all of your financial transactions. Your accountant can help decide later if you can use those transactions towards a deduction. 

Set Up Online Banking

Online banking is one of the easiest ways you can track some of your financial transactions. Not only is the information kept by the bank, but you can conveniently download and print it out each month to add to your own records. If you have not set up online banking for your business yet, do so now. 

Talk to an accountant or other tax professional like Wiggins, Smit, Burby, Reineke, & Company P.A. to find out other ways you can prepare to file your taxes. 

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