January marks the beginning of a new year with memories of the year just ended. While many people are recovering from a busy holiday season, business owners begin to focus their attention toward a dreaded but necessary part of running their business – preparing their income tax return.
For many photographers and small business owners, this is an unwelcome part of their duties. It takes away from the time they’re able to spend doing the things they enjoy doing that generate revenue for their business, replacing it with hours spent gathering and entering information needed to file their income tax return. However, it doesn’t need to be this way. There are procedures that can be put into place that can make this whole process go a lot faster and less painful.
- Keep Your Recordkeeping up to Date. Enter your cash receipts and payments into an accounting system on a regular basis. Making this a part of your normal weekly and monthly workflow schedule avoids having to spend hours doing this at the beginning of the next year.
- Keep Supporting Documentation.Keep all the invoices and receipts to back up the income and expenses that will be on your tax return. If you’re ever audited by the IRS, you’ll need to have anything they may ask for. If a receipt doesn’t clearly state what it is that was purchased, write a description on it.
- Have a Well Organized Filing System.There will come a time when you’ll need to find an invoice from a purchase that was made months ago, whether it’s because you need to look something up as you fill out your tax return or you need to check to see if a vendor’s price has gone up. Having your paperwork organized alphabetically or chronologically will make things much easier to find and save a lot of time.
The following websites have a lot of helpful information for small businesses.
- 9 Tips to Get Your Small Business Accounting in Order
- 5 Simple Tips to Keep Your Small Business Finances in Order
- Small Business Tax Tips
The IRS’s website has a wealth of information to help small businesses file their taxes. Their Small Business and Self-Employed Tax Center has links to forms and publications and lists of eligible business expenses, among other things.
I hope this information is useful to you and will help you get through tax season with your sanity intact. Have a great 2016!