Be proactive – start planning for taxes now.
Before the holidays hit, before the snow flies, before the busiest time of the year, you want to start your tax planning. Take the time to think about your 2014 taxes. Failure to plan and implement can cost you big time. Your time and your money are at stake. Leaning into the process and meeting it head on will reward you both in terms of less effort and likely less taxes to pay.
Priority 1 - Find out what your deadlines are
Depending on how you structured your business, (i.e. Partnership, Sole Proprietor, LLC, S-Corp, etc.) you will have different tax filing deadlines. Here is a site with a lot of useful information, which covers a variety of tax deadlines.
If you don’t know what your deadlines are the likelihood of failure goes way up. Commit yourself to knowing and meeting those deadlines.
How long will it take you to prepare your taxes? It depends. But one thing is certain: It will take a lot more time and cost a lot more if you do no planning.
Find a good CPA
If you do not already have one, ask around. Find someone who is reliable, who understands you and your business. Find someone you can trust. Meet and talk with them as soon as possible. Now is the time to have your CPA review your bookkeeping for the current year. Get feedback and recommendations so you don’t end up paying your CPA for bookkeeping cleanup when you are trying to meet your filing deadlines.
Develop a 2014 Tax Strategy
You want your CPA to help you develop a tax strategy for the rest of 2014. Now is the time to think about how bonuses, capital purchases, inventory & supply purchases, and how general year-end spending will affect your tax burden by December 31st.
How much cash will you need?
Ask your CPA to estimate your tax liability for the year so you can set aside sufficient funds to pay your taxes or come up with a plan to have the funds needed when the time comes to pay your taxes.
Filing an Extension
If you need to file an extension because you and your CPA failed to organize and plan sufficiently for a timely filing of your taxes, know that you are literally buying time. There is a cost, and it can be a nasty bite. You will be charged with late fees AND interest on both your federal and state returns.
Check out the linked website to understand why you want to avoid tax extensions.
If your books are in good order heading into tax season you will have no trouble meeting your deadlines. If you made a profit, you will have to pay taxes. It’s a good thing. Just don’t pay more than you have to buy kicking the can down the road.
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