Tax season has officially begun, and the April 15 filing deadline is fast approaching. Businesses everywhere have already begun issuing tax documents and collecting their receipts and financial statements in preparation.
Whether you’re running a large corporation or a small business, you’ll want to leave yourself plenty of time to prepare for Tax Day. That’s why we asked the experts of Forbes Finance Council how businesses of every size can ensure they’re ready. Our members shared 13 things every company should do before April 15 rolls around.
1. Keep Your Estimated Tax Liability On Reserve
The tax due date is marked in red because it’s a business expense—all expenses are red and all revenues are green. Every business needs to keep the reserve for the estimated business tax liabilities after proper tax planning. Businesses can use qualified plans such as profit sharing and defined benefit plans to reduce their additional tax liabilities. - Neil Jesani, BeamaLife Corporation
2. Examine Your Chart Of Accounts
As businesses grow, there are often new categories of expenses and income. It’s important to review your chart of accounts with your CPA at the end of each year and make sure you have categorized everything correctly so that you can take advantage of any deductions that are available to you. - Danielle Kunkle Roberts, Boomer Benefits
Forbes Finance Council is an invitation-only organization for executives in successful accounting, financial planning and wealth management firms. Do I qualify?
3. Plan Ahead To Avoid Tax Liens
Before tax season, have your financials in order, but more importantly, thoroughly understand your tax liabilities to avoid surprises. If you can’t foot the bill because you put capital toward growth, you’ll have more time to obtain financing. Failing to pay could result in a tax lien, which adds a significant speed bump to getting either business or personal financing (though it’s still possible). - Joe Camberato, National Business Capital & Services
4. Plan Around ‘What Can Go Wrong’
The most important thing businesses should do is plan ahead for “what can go wrong.” They should start early (before the holidays) and take stock of what could hinder them from meeting their tax goals. Digital banking tools can help identify bad spending habits and clients who pay late. They should also plan around the income volatility that can occur, especially with small businesses and the self-employed. - Lamine Zarrad, Joust
5. Make Large, Tax-Deductible Investments Before Your Financial Year Ends
Make any large investments before the year comes to a close. Deductions are your friend when it comes to filing taxes, so if you have been thinking about purchasing new equipment or materials now is the time to do it. Don’t let the government-sanctioned exceptions for businesses go to waste—consider making upgrades or capital investments before the financial year comes to a close. - Jared Weitz, United Capital Source Inc.
6. Prepare Your Tax Return As Early As Possible To Keep Your Options Open
Tax deadline strategy boils down to this: the earlier, the better. You’ll have more of your accountant’s focus at the start of tax season, which is the best time to strategize. Plus, as long as your return is prepared, you can wait to file if you owe money. But for those who are due a refund, filing early might be the best option. Waiting until later in the tax season robs you of those choices. - Carrie McKeegan, Greenback Expat Tax Services
7. Review The Impact Of Your Executive-Benefits Plan
Taxes represent a very stressful period for senior execs. A high-impact executive-benefits plan should help reduce this stress with year-round attention to financial decisions that produce tax consequences. There is a hidden benefit to this approach: Senior execs focus more on work and less on taxes during tax season. This is like finding hidden pockets of time for your top people. - Mia Erickson, Whitnell
8. Dig Your Well Before You’re Thirsty
My business-owning clients can’t wait until February or March to make tax decisions for the prior year. By then it’s too late. Business owners can face devastating financial events if they don’t build and execute their tax-mitigation strategy in real time, in the same year as they’re earning income. As Ben Franklin said: A stitch in time saves nine. Especially with taxes. - Brian Henderson, Whitnell
9. Hire A Good Financial Professional
If you have been doing this yourself, then you know how burdensome this task can be. Gathering receipts, filling out a tax preparer’s organizer, and tracking your expenses and your income takes regular data collection and entry to make your end-of-year tax planning easy (and cheaper). A good bookkeeper will save you money and time—your two most valuable resources. - Tim Clairmont, Clear Financial Partners
10. Keep Adequate Records
You must be able to prove that you’ve paid everything you owe. That includes employee taxes and employer taxes. Pay them and document them as you go, rather than scrambling to gather funds at the last minute. It’ll be much easier to keep everything on the up and up with the IRS if you don’t procrastinate. The IRS is one organization you don’t want on your case unless you’re okay with jail time. - Jeff Pitta, Medicare Plan Finder
11. Clearly Define Your Income And Expenses
Ensure you have good records. The cleaner and more detailed your files, the more prepared you’ll be as tax time rolls around. You want to define your income and your expenses clearly. However, the best step you can take is setting up a meeting with your advisor and doing tax planning well before January is here. November or December is when you should know a close estimate of your tax liability. - Justin Goodbread, Heritage Investors
12. Start Planning For Next Tax Season Today
When your tax filing date rolls around, your planning opportunities are most likely gone. It’s too late. You want to begin planning in the previous fiscal year when you can still make adjustments to things like employee benefit plans, retirement plan contributions and capital expenditures. - Bill Keen, Keen Wealth Advisors
13. Incorporate Tax Planning Into Your Year-Round Activities
Pay your taxes and do a thorough review of your cash flow projections each quarter (monthly would be better) so you’ll be ready to pay your tax bill on time. You can’t get financing from many quality, affordable lenders if there’s a tax lien on your business. Before you plan or make a big purchase or investment, be sure the money you have available won’t be needed to pay taxes due tomorrow. - Luz Urrutia, Opportunity Fund
This article originally appeared on Forbes.
