An efficient business owner always looks for efficient ways to simplify routine business operations. These tips can help you simplify tax compliance and save you time.
During the journey of starting your own business, you will come to learn that regardless of what people think, coming up with a business idea is not the hardest part. Figuring out how to manage all aspects of your small business is where the real challenge lies.
Early on, you probably won’t be able to afford to hire specialists to handle intricate functions like finance and accounting. However, given the risks associated with financial matters like legal penalties, you need to find a way to simplify the difficult tasks.
Tax compliance, for example, is one of those functions that you can’t afford to mess up. Ensuring that you are calculating your taxes correctly and in a timely manner will have a huge impact on the success of your business. You need to find smart solutions you can implement to ensure your business’s legitimacy. This is why we’ve created this short guide to help you simplify tax compliance.
Learn About your Tax Obligations
A thorough understanding of your tax obligations will help make the process much simpler. The types and amount of taxes your business will incur will differ according to your business activities and how much profit you make. Such information can be a little overwhelming to navigate, especially if you don’t have prior experience with taxation. However, educating yourself about the vital aspects of your business will give you an edge and set you on the right path of becoming a successful business owner. Look up information online and visit your local tax authorities’ websites to have a clear understanding of your tax obligations.
Separate Personal and Business Accounts
Many people fall into this mistake and delay separating their personal and business accounts thinking that it’ll be easier to manage this way. However, if you choose to follow this approach, you will be setting yourself up for failure when it comes to preparing your tax reports. Creating a separate corporate account for your business will make record-keeping much more manageable. Furthermore, you should keep an eye on the future; your business is bound to grow, so it only makes sense to set it up early on when the financial data is still simple and straightforward.
Be Vigilant About Keeping Accurate Records
If you want your business to succeed, you must adopt seamless organizational skills to keep accurate and updated company records. Financial information, permits, and licenses all need to be constantly updated and any related documentations need to be carefully saved. This step alone will considerably cut down the time and effort associated with tax preparation. In fact, it’s better if you hire a specialized firm that offers Tax Consulting Services since this task is extremely important for proper tax compliance. Professional tax advisors have both the know-how and the tools to ensure you are keeping your financial records in the best way to minimize the chance for any incriminating tax errors. They will also help train you and your team on how you can prepare for more complex tax-related activities as your business grows bigger.
Follow a Tax Calendar
Creating a tax calendar highlighting all the important dates will help you and your team better track your imposed taxes. You can make it as simple or as complex as you prefer it to be. As long as all the involved personnel have access to the tax calendar and can easily understand it. The calendar will also guarantee that all the essential forms and reports are prepared ahead of their filing due date. As a small business, the two most important reports will be the Business Activity Statement and the Income Tax Statement. The former showcases the accounting of your goods and services and the latter contains information about your personal and business income and deductions.
Join the Small Business Support Agency
Sometimes the best thing you can do for your business is to surround yourself with other individuals that are going through a similar experience with their businesses. Small business agencies are scattered all around the country with the sole aim of helping small business owners navigate the multiple facets of the business field. Exchanging information and discussing best practices when it comes to tax compliance will add on to your practical knowledge and enrich your overall experience. Your business network can give you valuable advice about the best tax consulting firms out there as well as the most reliable resources for you to follow. Joining a small business association will even open the door for future business opportunities that otherwise you wouldn’t have access to.
Incorporate Useful Technology
There are many tax reporting software options in the market that can further simplify your tax preparation process and guarantee your company’s compliance. Usually, the software is all-encompassing and come with their own implementation and support team. The support team will be training you and your team on how to best utilize their product for your specific needs. They should also provide you with after-sales services and offer to upgrade your software as needed. Don’t dismiss this tool as a luxury investment that you can’t afford. When you compare its cost with that of noncompliance, you will have a better perspective on why you need a tax reporting software.
Stay Up to Date with New Tax Laws
Tax laws are constantly updated to reflect economic and political changes. For small business owners like yourself, it’s your responsibility to have a reliable source to keep you informed of new legislation. Luckily, there are a number of applications and websites that you can register with to receive notifications whenever a new law is issued or an existing one is adjusted. Being well-prepared is key to a smooth tax compliance process.
An efficient business owner is always looking for smart and efficient ways to simplify routine business operations. The above tips can help you simplify tax compliance and save your valuable time for more pressing business issues. For the best results, manage your expectations and bear in mind that it will take you some time before you find the right advisors and become fully-confident in your tax compliance.\