Small Business: Staying Afloat During Tax Season and Beyond
Tax season is an extra busy time for small business owners. About 70% of small business owners outsource their tax preparation to a CPA or other trusted financial advisors. The business retains the responsibility for preparing records and financial statements. The following are the top four challenges for small business owners during tax season according to the Small Business Accounting Report from Wasp Barcode Technologies
- Accounts receivables/collections
- Cash flow
- Managing receipts and paperwork
- Keeping their accounting software accurate
Tax season can be a burden to any business owner. Forbes suggests that there are 5 practices you can keep in an effort to stay on top of things.
- Prepare all year long. Record expenses, receipts and gas mileage daily. This will require 5-10 minutes of the day as opposed to hours at year-end.
- Forbes says “Don’t let ghost assets haunt your tax return”. According to Small Business Accounting Report, 70% of small business owners are unfamiliar with this term. Ghost assets are defined as “assets that can’t be accounted for because they are either missing or rendered unusable”. It is important to use software for inventory and asset management.
- Always check the new tax laws and be sure you are taking advantage of all potential deductions.
- Keep up with accounts, as well as income, expenses, and payroll. Hire a trustworthy accountant to do your taxes and review your books.
- Retirement Accounts such as IRA’s defer tax on the money you contribute until you take it out. Work with your accountant to set up smart accounts that will not create tax burdens.
Business owners face many challenges. Finding solutions to those challenges is key to staying in business. Maintaining positive cash flow is another of those challenges. Managing costs is an integral part of keeping cash flow positive. There are many business expenses affecting cash flow.
A large part of the expense of a business is overhead. Leasing office space is expensive. Always be sure you are utilizing your space and look for less expensive space if necessary. Office supplies are one of the most wasteful expenses in a business. Check supply inventory and order only items that are used weekly or monthly. Look at what you have and how long it has been sitting there. Reuse supplies such as file folders, paper clips, when possible.
Employees are the backbone of any business, but they also incur the most costs for a business. Make sure employees are trained properly and cross-trained when possible. Are there any employees that do not have enough to do? Look at combining positions and cutting back on employees. Office efficiency is key to keeping your business growing and keeping a positive cash flow.
Keeping cash flow positive is always a challenge and that challenge increases during tax season. Taking these simple steps will help to decrease challenges for small business owners.
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