How To Make the 2022 Tax Season Easier
Hello! You have a tax deadline on March 15th if you are a:
S Corp
LLC with S Corp elect
Partnership LLC
And one on April 18th if you are:
Single member LLC (with no election)
LLC with C Corp elect
I usually recommend choosing and LLC electing an S Corp, but that’s for another article.
I’m going to work backwards here to show how to make tax season easier.
1. Give your CPA accurate and organized financial statements
During tax filing time, a CPA’s sole function is to take your financials, use the numbers to fill out the appropriate tax forms and file it on your behalf. I always recommend a CPA over software like TurboTax for your business, but either way you need to know your exact numbers.
If you are guesstimating, then you might be overpaying or underpaying - you’ll never know.
It is NOT a CPA’s job to know IF your numbers are correct, and most don’t have time to question them. (It’s also a little “below their pay grade” kinda thing.)
If you are guesstimating, that also means that you didn’t do the bookkeeping and other financial work necessary to run your business during the year.
2. Keep accurate and organized financial records
While working within the law (and tax laws change every year), you want to maximize profits and minimize tax fees. The best way to keep everything above board is:
accurate bookkeeping
thorough record-keeping
Business activity is usually nuanced and not always straightforward, at best. There are degrees of complications, but very few businesses have simple books. Simple books are usually just uninformed business owners.
Hire an accounting professional to achieve most accurate bookkeeping. Remember this is an expert profession. People go to school for this. Do not minimize this knowledge. This way you can see exactly what is legal and correct.
If you have to cut corners (ie: guesstimate) in order to save money, then the problem lies with your business model. That’s a hard pill to swallow but important if you want to be a successful business owner.
So let me break it down again - the best way to make tax filing easy is to put in the work the year beforehand. Ugh, right?
If you missed last year and are struggling now, my advice:
Check out which entity you are and the dates at the top of this article.
Realize that it’s February and most CPAs are booking up. You might need to file an extension because you will be on a waiting list with them depending on how many clients they can work with at a time.
Did you keep records with an accounting app? If yes, go through and double check the work or do the catch up now. Perhaps have a CFO look it over to fix major errors at least.
Didn’t keep records? I’d crack that bottle of wine open right about now - JK - but then you are doing the “quick and dirty” version. Again, really not a fan of this but it’s better than not filing at all. Downloading all the bank and credit card activity and manually doing your best to assign what everything is.
If you are doing the “quick and dirty” or anything similar, then take that as a sign to do the right thing for 2022. It’s only February and you can easily get organized for this year. Plus having timely and accurate numbers will let you make informed decisions on your business throughout the year, which usually leads to more growth and profits. Huzzah!
So to sum up the “sum up” -
Keep accurate and organized financial records
Give your CPA accurate and organized financial statements
Plan ahead, follow this and tax time will be quick and easy.
