The Entrepreneur Highway: Troubleshooting Tax Time

After the fast-paced sales of the 2010 final quarter, the new year has arrived with inventory stock in short supply while you anticipate delivery of new merchandise to dazzle buyers back to your listings or website. For some small business online sellers January can also herald in an abundance of time that makes for idle hands and unconstructive thinking.

As much as all business owners wish otherwise, January is, without a doubt, the slowest month of the year for sales. Instead of wondering or worrying when that next transaction will happen, take advantage of the sluggish post-holiday drought to organize all those full to bursting computer and paper files.

More important, while cleaning out all that old year information to make room for the new year, start gathering needed documents for your ‘accountant box’ and that fast approaching tax time in April.

Before starting your online business you took the time to research, to get solid advice to provide yourself with the best possible foundation for success. So why jeopardize what’s yours by avoiding professional tax preparation simply to save a few dollars?

The objective is to keep as much hard earned money in your business account and out of the government’s hands. To do that you need someone knowledgeable about small business formats and the numerous tax requirements and deductions allowed.

Going it alone with a tax return for your business can be much more complicated than most of us know how to handle. And unless your hobby is small business accounting, the cost of a Canadian CGA, Certified General Accountant, or a United States CPA, Certified Public Accountant, will more than likely be offset by the money saved through extensive deductions and tax-saving investment advice.

Just remember.  The more facts and figures your accountant has to piece together for your tax return from that shoebox full of receipts, the more you’ll end up paying for their specialized service. Simply asking what records and reports you can organize in advance will help save time for both of you and keep more money in your pocket.

In most cases it’s merely a matter of preparing as much information ahead of time like tracking business expenses on a spreadsheet throughout the year, using an accounting program and saving the data to disk to give the accountant a bird’s eye view of your financial history, or just having everything written down in an orderly manner with all receipts available.

Prepare an accountant’s box to hold disk copies and all the necessary backup paperwork for the tax year in case the accountant needs to backtrack a problem.

As you’re separating out tax information take the time to group similar statements together with folding clasps, sales invoices/refunds by month and have them clearly marked. Create a hardcopy of your expense spreadsheets for the office, vehicle, and remaining year-end inventory reports as backup and for quick reference.

Anything you submit as a business expense needs to have receipts or statements for each, providing the accountant with support material to approve the deduction or reject a questionable claim and avoid an audit headache further down the road.

Having an accountant who understands your business and financial situation makes a great reference resource during the year. Answers are just a quick email or phone call away.

So now your files are cleaned out and all set for 2011. Your accountant box is ready and awaiting those last minute documents and government forms. You’ve been so busy making a positive difference . . . and look, that first sale of the new year has arrived in your inbox!

I’m an online entrepreneur. How about you?

TimelessTemptationsbyTopCat.com

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