Getting your Corporation Ready for Tax Time
A lot of people get stressed out around tax time, and this includes corporations, no matter their size. If you don’t have your company in the right state, if you’re not organized and planning your tax strategies well, or if you didn’t think ahead and prepare, you could find yourself with a hefty tax bill that you didn’t expect.
However, if you are prepared and your corporation is ready for tax time, you’ll take a lot of stress and anxiety out of the situation. Plus, you’ll likely be able to save some money. Here are five things you can do to get your corporation ready for tax season.
Start Planning Early
Taxes aren’t something that you should rush and put together as the clock ticks down to the corporate tax deadline. Instead, start at the beginning of your corporation’s tax year and make a plan for how you will arrange your finances during the year. Consider your overall situation and plan for what you will do to reduce your tax bill. The earlier you start speaking with your accounting team and arranging a tax strategy, the more time you will have to implement it correctly.
Make Sure you Have all the Information
You’ll need to ensure that you have all the information necessary for preparing your corporate tax return. Make sure you have your corporation’s financial statements in order and on hand (such as your balance sheet, income statement, statement of retained earning, etc.) as well as any notes that go with your corporation’s financial statements (to explain various line items).
You’ll also need to make sure that you complete the various schedules and lines indicated on your return.
Another aspect of tax planning that shouldn’t be rushed is organization. It is much easier if you correctly file all information slips, supporting documentation, receipts, statements, etc. as they come in. You don’t want to be frantically searching for something later on when you really need it.
It’s also a good idea to create a summary of your income, your deductions, and your tax credits before you meet with your accountant or tax professional. If you do, they won’t have to spend time putting everything together to get an accurate picture of your situation. This will mean they’ll have more time to work on tax strategies with you. Plus, you’ll save yourself some money in fees if the tax preparation process goes more smoothly.
Individuals and smaller businesses (such as sole proprietorships) may be able to get away with doing their taxes themselves. However, there are several significant advantages to working with a professional, such as a Chartered Professional Accountant (CPA). This is especially true for a corporation.
A CPA has the expertise needed to likely find your businesses significant tax savings, often enough to cover their fees entirely. For instance, a CPA will sit down with you to develop a tax strategy for your business, taking into account its structure, shareholder composition, and more. By correctly implementing this strategy, you’ll save money on income taxes.
Whether you are a smaller corporation or a larger one, there are several ways that you can minimize your tax obligations if you have the right strategy. A CPA can help you discover it. For more information, please contact us today.