Tag Archives: tax prep

Preparing for 2017 Taxes: 5 Things You Can Do Now

Your income tax obligation needs to be on your mind year-round. Here are some ways you can get a jump on your 2017 taxes.

Summer’s over. The kids are back in school. And soon, there’ll be only three months left in 2017. If you haven’t started thinking about how to minimize your income tax obligation for this year, there’s still time.

Whether you’re a small business or an individual taxpayer, year-round tax planning is more than just a way to make tax preparation an easier, faster process. By keeping taxes in mind as you go through every 12-month period, you’ll be able to see where you might take specific actions early that will have impact on what you end up owing. Make it a habit, and you’ll find that it just comes naturally to consider the tax implications of purchase and sales decisions.

Create a System

Effective tax planning requires more than just saving receipts and organizing tax-related documents in physical or digital file folders – though that’s a good start. Create a system in early January that you can maintain throughout the year (of course, a lot of your information will be stored in your accounting or personal finance application, if you use one). But you should be saving statements, receipts, sales forms – anything related to your income and expenses that will eventually feed into IRS forms or schedules.

Evaluate Your Expense-Tracking

Businesses: How do you—and your employees, if you have them—keep track of daily expenses? You may have forms like purchase orders and bills for the big ones, but you probably buy things on occasion that are just documented by paper receipts. How do you categorize and organize these so you won’t miss any when it’s time to complete a Schedule C? Is there a better way?

Do any of your employees make trips on behalf of your business? You really should consider subscribing to an online service that automates the process of creating and approving expense reports. If you’re not aware of these options, ask us.

Know Your Tax Forms

Individuals and businesses file some of the same forms and schedules, but some, of course, are different. Your previous years’ tax returns can be good resources for you. Refer to them occasionally as you go through the year and do some comparing, especially if you must pay quarterly estimated taxes. You may not remember from year to year what’s deductible and what’s not. Revisiting your returns will jog your memory and remind you.

Consider Generosity

Are you having a good year? You’ll have an idea of how your financial health is if you’re keeping up with income and expenses. You don’t have to wait until the end of the year to do any charitable giving that you’re going to do (although it’s usually best to hold off until the fourth quarter).

Learn How Changes Will Affect Your Taxes

This is so important for individual taxpayers. Did you get married or divorced, or have a child? Did you move? Buy or sell a home? Get a raise or, conversely, lose regular income for some reason? Did you have educational expenses? All these life events—and more—can change your income tax obligation.

Businesses often experience major changes, too, and your financial state at the end of the year is way harder to predict than it is for an individual with W-2 income. Stay on top of the impact of deviations in income and expenses created by events like the introduction of new products (or the loss of existing ones), personnel fluctuations, and major acquisitions.

Comprehensive Planning

Tax planning should be an element of your overall financial planning. If you have a business or household budget, you’re way ahead of the game. You can compare your actual income and expenses every month to those you built into your budget. A budget can be a tremendous tool as you plan for the current year’s taxes. If you’ve never created one, or if you’ve never stuck to one successfully, we can help you with this.

We’d also be happy to work with you periodically throughout the year on taxes. We can get you set up with financial software if you’re not already using it and advise you on ways to work toward minimizing your 2017 obligation now.

Get Ready for Tax Preparation: What You Should Do

April 17 is still months away, but now’s the time to start preparing.

You’re undoubtedly very busy right now. It’s the middle of the holiday season and moving quickly toward the end of the year, so you probably have reports and other documents to prepare. Perhaps you’re running sales or offering discounts to pare down your inventory before December 31.

Why should you be thinking about something that’s not due until next spring?

Two reasons. First, there are tax-related activities you may want to know about and take care of before the calendar flips over to January. And second, you’re already deep into year-end wrap-ups of one kind or another. Some of your tasks may be able to do double duty.

Give your accounting application a workout.

You’ll want to have all of your 2016 expenses recorded, your bills paid up, and all income entered.

  • Pay special attention to expenses, many of which will be tax-deductible. What about employee expense reports? Ask your staff to submit expenses quickly or risk not getting paid in 2016. Same goes for any billable time they may have forgotten. Have you or your employees bought anything that needs to be charged to a customer?
  • You’ll find a lot of your expenses in your bills.
  • How do your aged receivables look? Although December is a terrible time to try to collect outstanding debts, at least get on past-due customers’ radar. You may not get paid until January, but you’ll have started the conversation.

Stress the importance of accurate, promptly-submitted timesheets. If you have full-time or contract employees, you’ll have to prepare and dispatch 1040s and/or 1099s in January. Since people will be coming and going during December, send out an email or otherwise remind your employees they’ll need to take care of timesheets before December’s end. You’ll want a solid year of payroll information when tax time rolls around.

Check your estimated tax payment history for 2016.

You should have made three payments by now. If you need to catch up, try to do so before the end of the year. You may still be penalized, but make a good-faith effort to have fulfilled your 2016 quarterly IRS obligations.

Designate a special place for all tax-related information. This is more applicable if you do your accounting tasks using paper and/or Excel, since accounting applications serve as clearinghouses for all of your financial information. If you do a lot of your financial tracking in Excel, be sure that those spreadsheets are saved to one folder, with nothing extraneous included. Store papers in folders with flaps, not file folders that can spill critical documents.

Shoot for an early filing. You can’t, of course, actually file your taxes until sometime in mid-January, when the IRS releases its finalized forms and opens the official filing season. If you find out in January that you’re going to owe money, you still have almost three months to pull that together.

Make your to-do list for January.

Again, January will fly by because of the holiday slow-down. Remember to:

  • Make your fourth quarterly estimated payment by January 17, 2017.
  • Create and distribute 1099s and W2s.
  • Educate yourself on any end-of-year tax laws changes from 2016. It’s a good idea to do this throughout the year so you can do any financial planning necessary, but certainly see if anything slipped in under the wire.

Squire can help by answering any last-minute tax questions, and we’d be happy to work with you on preparation. Either way, January is a good time to start thinking about your 2017 income taxes, as odd as that sounds. Year-round tax planning gives you peace of mind throughout the year, and can help you minimize your tax obligation.