Entrepreneurs entering tax season have several choices when it comes to preparing tax returns. Those options include completing the tax returns manually, using do-it-yourself tax software or enlisting the help of a qualified tax preparer.
If you’ve decided to hire a tax specialist to do the work, chances are the process will start with an appointment where you meet to discuss your business year and hand over any receipts and invoices. As you and the tax preparer are busy people, consider following these tips to prepare for the appointment and to make your time together a bit more efficient and effective.
Categorize and add up expenses
The thought of handing over a box full of receipts to the tax preparer to let him or her sort it out is appealing because you’ve delegated the work. However, sorting your expenses into basic categories and totaling the amounts of receipts in those categories is an easy way to reduce the amount of time your tax specialist spends on your file. It could also reduce the amount of money you spend on these services.
• Ask your tax preparer to supply a list of receipt categories. Write the name of each category on a large envelope (e.g. Automobile Expenses) and enclose those receipts. Total the amount of all items and write it on the envelope.
• Once you’ve done the same for all expense categories, summarize the numbers in a simple Excel spreadsheet for the tax preparer.
Write down any questions. You likely won’t have much time in your meeting with the tax specialist, so come prepared with a list of questions or concerns. If possible, submit them to the specialist in advance of your meeting so he or she has a chance to review them.
Review last year’s tax return – before the meeting. Going over last year’s tax return is a good way to check if you’ve forgotten anything to do to prepare for this year.
Make notes. During your meeting, record answers to your questions (such as, “Should I buy or lease those new computers during the next year?”) as well any general information to help you gain a better understanding of your business financial statements. The notes can be used to guide key financial decisions ahead.
If you feel like you’ve stumbled through tax appointments in the past, take heart. Set out to make the most of your appointment this year and aim to learn at least one new trick to make tax time easier.
How do you make the most of your tax appointment? Please share your comments in the Get Growing For Business Discussion Group on LinkedIn.
By Roger Pierce, Small Business Expert for Scotiabank
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