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How to Prepare for Tax Planning and Filing season

Updated: Dec 19, 2023


 

Tax Planning and Filing season

When the end of the tax year is quickly approaching, that means it's time to get organized and start worrying about your company finances. With all the deadlines and other requirements that come with filing taxes, it can be stressful. That's why we're here to help you prepare for this important deadline. We've compiled some tips on how to prepare for year-end tax planning and filing so that you don't have any surprises when it comes time to file.


Know your deadlines. If you're a business owner, it's important to know the deadlines for filing your taxes. If you miss one of them, there could be serious consequences. The IRS will charge penalties if you don't meet certain tax filing requirements by their due dates - and those penalties can add up quickly!


Review your financial statements. Reviewing your financial statements is a good way to understand the health of your company.

  • A profit & Loss Statement (P&L) shows how much money you made or lost over a period of time (usually one year). It also shows how that affected the value of assets and liabilities on the balance sheet. It's important for understanding whether or not you had enough income during the year to pay taxes on all those profits, and whether or not there were any excess expenses that could be written off against future profits instead of being paid out-of-pocket by shareholders (if they weren't reimbursed). The P&L statement is one of the most important financial documents for a business, as it provides insight into how the company is performing financially.

  • The balance sheet breaks down what kinds of assets and liabilities exist within an organization at any given point in time. It helps determine if there are enough resources available right now so employees can continue working without interruption while also helping make decisions about future investments in equipment, supplies, etc.

  • The cash flow statement shows the inflow and outflow of cash in a business. It is a statement that reflects the cash generated and used by the company over a period of time. It is important for a business to have positive cash flow and to track it, as it indicates the ability to meet financial obligations and invest in growth opportunities.

Analyze your depreciation. Depreciation is a tax deduction that you can claim on business assets. It's calculated by subtracting the salvage value of an asset from its original cost, then dividing that amount by its useful life. The result is called depreciation expense, which you can deduct from your income in order to reduce your taxable income for the year.


Make estimated payments for the current year. Estimated tax payments are made to the IRS throughout the year to cover your estimated income tax liability. You should take advantage of tax deductions that reduce your taxable income. This means that you'll pay less in taxes at the end of the year. There are many types of deductions available to business owners, including Medical expenses, Charitable donations, etc. To claim these deductions on your business tax return, they must meet certain requirements set by law. For example, if you're claiming a charitable donation deduction because it was made directly to a qualified charity, then make sure that amount is clearly noted on their acknowledgment letter or receipt. Otherwise, there will be no record of auditors being late.


In conclusion, Tax planning is not something that you can do on your own. As a small business owner, it's important to understand the tax code and how it applies to your company. A professional can help you navigate the complex world of taxes, enabling them to make decisions that are best for your business. We hope this blog was helpful in planning for the end of your business year. Remember that there are many factors that go into preparing for tax season, so it is important to be proactive and take charge of your finances.


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