April 16th may feel like a joyous occasion for small business owners and an excuse to throw down the tax towel and shake off the tax blues for another year, but this kind of approach can be dangerous, to say the least!
Ditching tax talk for the rest of the year after filing, can land you in big trouble when the next tax season gets into full swing, and here’s why:
Dropping your guard could cost you money:
Planning and preparing for tax season, isn’t something that can be focused upon for one part of the year, and then abandoned for the rest of the time, and if you do, you could find yourself less well off at tax time.
A proactive approach is essential if you want to set a more accurate budget for your business, improve decision making and avoid potentially costly penalties. If you’re not able to get all the relevant information ready in time for the deadline – and this applies if you have a bookkeeper and accountant, too, as they will require certain data from you in order to file in time – you can incur ‘failure to file’ penalties or ‘failure to pay’ penalties, both of which can mount up and cost your business greatly.
No tax professional – no sound advice and guidance:
If you don’t engage with a tax professional all year round, either a bookkeeper, accountant, or ideally, both, then not only are you at risk of missing deadlines and not submitting the right information, but you’ll miss out on their advice and guidance that can help shape the future of your business. Taxes have such a huge influence over everything business decision that you make, that not consulting with a professional can cause your business to fail for any number of reasons.
Disorganized accounts can lead to nasty surprises at tax time:
Keeping forward looking financial projections can help you to maintain an accurate view of your potential burden at tax time, and with a bookkeeper and accountant on hand all year round to help you, you should be able to minimize nasty surprises at tax time.
Irregular progress reports can hinder a small business:
While it may be more time consuming, tracking the growth of your business in micro terms can give you a much clearer picture of how it can scale at a quicker pace. If you’re not used to doing this, try accelerating the payment of some expenses rather than waiting until the end of the year, and you should have a much better idea of where your profits are, and where they’re not.
Being diligent with your small businesses taxes all year round, can help you in so many ways that there is precious little excuse for not doing so. If you use a tax professional only at tax time, consider employing them for the whole year, and you should reap the benefits when it comes to filing. Minimize future tax payments, plan for those payments you know you’re expected to pay and avoid a whole host of compliance disasters waiting to happen.