October 20, 2022

Tax Season is Here: Are You Prepared?

As we get closer to Tax Day, it becomes important to have all your small business finances in order, but it can be easier said than done.

Anyone who owns a small business knows that managing the day-to-day operations and preparing for tax season at the same time can be challenging. But if you feel unprepared as Tax Day nears, stress can build. To help the process of tax filing go smoothly and reduce your anxiety, we have gathered some tips below.

1. Know the Tax Deadlines and Extensions

First, it’s important to know your tax deadlines so you can plan efficiently. For 2022, the small business deadline for filing a Connecticut income tax return is Monday, April 18. According to the Connecticut State Department of Revenue Services, for the tax return to be considered timely, it should be filed on or before April 18. You can file for an extension, but it must be done before April 18. If you do, keep in mind that your tax-filing deadline will be extended to October 17, 2022.

2. Create Your Documentation

Whatever you do, don’t wait until tax season is here to make sense of your documents. Whether you hire a bookkeeper, or use software for tax prep like QuickBooks, make sure you have your documents organized for your accountant. You’ll want to gather your receipts, invoices, bank statements and credit card statements. If you’re using a cloud-based system such as Google Drive or Dropbox, you can upload records into spreadsheets for easy access.

3. Double-check Your Documents to Avoid Surprises

Double checking your records is always a good idea to ensure you have all the revenue and deductions you need for your tax return. You can do this by making a list of your income and expenses for the year. You then check your documents against the items on the list and make corrections as needed. This way you can avoid any late corrections come tax time. As always, make it a habit of keeping copies of everything throughout the year.

4. Prioritize Deductions

As a small business owner, you’re always looking to save money where you can. Claiming deductions such as your home office, work-related car use, office supplies, professional fees, education, and rent can lower your tax bill. Be sure to take advantage of all deductions available to maximize your savings. If you have employee-related tax breaks that would be beneficial to claim on behalf of yourself or any employees, make sure they are listed in your filing as well.

When in Doubt, Talk to a Professional

Although tax season is typically a more stressful time for small business owners, staying ahead of the game, is key for filing successfully and on time. You should always try to put together a basic financial plan before tax season hits. This way you are aware of where your money has been going. You'll also be aware of what deductions may be available to help reduce your overall income and save some of those hard-earned dollars. If your small business needs help preparing for tax season, you can write to ASPBookkeeping, or call 203-641-7678 for a free consultation.

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