4 Simple Tips to Prepare for Next Year’s Taxes

Savvy business owners understand tax season is a year-round event; and as soon as the tax deadline passes, they're able to shift their focus more toward preparing for next year's taxes. Failure to prepare for next year's taxes early often results in you paying Uncle Sam way more than you should.

However, when you proactively prepare for next year's taxes, you can simplify the tax filing process and make everything easier.  Let's take a quick look a few ways you can prepare for next year's taxes.

Hire a Professional Accountant to Simplify Next Year's Taxes

As a business owner, you have a lot of your plate, and we're almost certain you don't specialize in tax preparation. Even if you do have a background in tax planning, your time will probably be best suited running and growing your business. Instead of trying to do it yourself, you'll find ample security and efficiency by trusting the reliable and experienced accountants at John F. Dennehy CPA to manage your tax planning.

When is the best time to meet with our team of professional tax accountants? Now! However, it's never too late. The experienced team of tax accountants at John F. Dennehy will work closely with you to optimize your tax return and ensure you don't make expensive tax mistakes for small businesses or raise the most common IRS red flags.  

Digitize Your Receipts & Prepare for Next Years Taxes

Whether you work with an experienced accountant or you do your own taxes, you can save time and money by simply digitizing your receipts. Most expense tracking tools make it easy for you to quickly scan and save receipts. You should make it a regular practice to scan and upload receipts. You can even use mobile apps to quickly take a picture of receipts and enter the required information in the fields.

Digitizing your receipts will help reduce the amount of clutter because you can now throw the paper receipts away. Most importantly, you'll have an organized and safe online file of all of your expenses, which can be everything if you're audited by the IRS. With the click of a button or the swipe of a finger, you can share access of the digitized receipts with staff accountants, secretaries, and even outsourced accounting agencies.

Review & Strategically Plan Equipment Purchases

Did you know Section 179 allows you to deduct the full purchase price of qualifying vehicles, equipment, and capital purchases? Section 179 and similar tax deductions can have gargantuan implications on your small business tax liability. Some of the most common equipment that qualifies for the Section 179 deduction includes:

If you're in the market for these types of capital purchases, it only makes dollars and sense to plan your purchase with a strong focus on the tax implications. Instances like these are where the professional tax accountants at John F. Dennehy CPA can be especially helpful. We can help you plan your purchase with respect to your ability to prepare for next year's taxes. 

Will You Qualify for Any Tax Credits?

Tax deductions — like the home office deduction — and tax credits are both designed to reduce your potential tax liability. Tax credits reduce your liability on a dollar-for-dollar basis, while deductions do so in a way their net effect is savings equal to your tax rate. For example, if your company has income of $100K and taxes of around $23K, a $10K tax deduction would reduce your taxable income to $90k and result in taxes of around 19k.

In other words, a $10K tax deduction would deliver approximately $4,000 in savings. However, a tax credit of $10k does not' apply to taxable income, but it applies to your taxes owed. This means a $10k tax credit would reduce your taxes owed from $23K to $13K. Simply put, tax credits can be exponentially more valuable than tax deductions. As a small business owner, you have access to a full catalog of different tax credits, such as: