5 ways to reduce your tax troubles

  1. Tax troubles

It is never too early to plan for simplifying your taxes. Whether you are an individual or a company, it is often seen that there is a mad rush as soon as the tax deadlines approach to achieve last-minute compliance. Putting good systems in place to ensure that you don’t have to contend with heaps of unsorted invoices, receipts and expense reports is a good beginning and one that will infuse the much needed tax planning discipline.

So let’s plan for 2015 and here are some nifty inputs:

Sort: An often overlooked area, this can immensely help in formulating a well-oiled system. Do not cram all your financial information in one file. Segregate. Use separate online folders or physical ones and have three categories: Income, Expenses and Tax. It will help to have different colors on the file to ease the physical work. Now keep you payroll stubs, 1099’s, Gain and loss, dividend distribution etc. in Income. Keep your business expenses in expenses and all your tax paid receipts in taxes. This will help you find information when you need it and also help in aiding bookkeeping.

Schedule: It is important that some time be allocated at the end of every week to ensure that tax planning obligations are being fulfilled in increments. The first thing to do would be to make a calendar of all tax planning events with their deadlines. That will ensure that right at the start of the financial year, you get to see the various activities related to tax planning. Spending just a little time per week can save stress and panic at the last moment, not to mention errors.

Engage competent bookkeepers: If you feel that your in-house finance team is constantly stressed and unable to cope with the rising demands, it is time to consider remote bookkeeping or outsourcing bookkeeping requirements. This will ensure that there is decorum and that receipts, bills and expense reports are handled on a day-to-day basis allowing nothing to get piled up.

Use good software: These days you get excellent tax planning software as well as aids to help with not only digitizing data but also report generation. Hence, all your financial data is available in the digital format for tax planning as and when needed. Many bookkeeping firms have cutting-edge expensive software that you get free access to if you outsource your work to them.

Be organized: Get into the habit of accounting for information as soon as it arrives. With smartphones, it is easy to now click pictures of any receipts and expenses on the go. Make sure that all your digital accounts are synced regularly both within the organization and with your bookkeepers. To keep your office and accounts uncluttered, it helps to digitally file your previous accounts in the cloud and then shred the physical documents. Too many records gathering dust create a space as well as access problem.

Using these simple tips, one can plan for a hassle free and smooth tax season for next year and the future.

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