Whether or not you’ve filed your 2015 income taxes, you might want to get a jump on preparing for your 2016 obligations.
If you’ve recently filed your 2015 income taxes or plan to soon, probably the last thing you want to do right now is spend more time thinking about income, deductions, and credits. Actually, though, this is an excellent time to start planning for your 2016 taxes. The good—and maybe poor—financial moves you made in 2015 are still fresh in your mind.
So here’s what we’d suggest for you if you’re still struggling through your income taxes on your own.
- Plan a session where we can sit down with you and whoever else in your company works with accounting and go over your 2015 return. We can point out where you might have maximized your deductions and even rescheduled income items that could have been be accelerated or delayed. If you have a business plan or some kind of overall financial strategy on paper, now’s the time to pull those out and assess their tax elements. Tax planning should always be a part of your overall financial plan. (Don’t have either type of plan? We can work with you to create one.)
- Be vigilant about creating reports at least once a month. You need to know whether your customers are keeping up with their invoices and you are paying your bills on time. What do your income and expenses look like? How do your actual numbers compare with your budget? Well-constructed, customized reports can point out trouble spots. And the sooner in the year you know about problems, the more likely you’ll be able to correct them. (We can run the more complex financial reports that may be difficult for you to analyze, but which can shed a great deal of light on your fiscal health.)
You’ll make better, more informed business decisions if you’re running reports regularly. We can help you analyze the complex ones.
- If you’re still doing your accounting manually, consider making the transition to desktop-based or online accounting. The type of reports that you need to be seeing every month will take hours to assemble by shuffling through papers. And they may or may not be accurate. Accounting applications can produce these in seconds. (We’ll be happy to make a recommendation and see you through the transition, as well as provide ongoing support.)
- Use what you’ve learned by generating reports to calculate your quarterly estimated taxes every three months. It’s impossible to come up with good estimates of what you owe every quarter without seeing reports that give you clear, comprehensive data—both in summary and in detail—of your tax-related income and expenses. (Here, too, we’d be happy to help you deal with your most current obligation and look ahead to the next quarter.)
- Accelerate your tax planning in the last quarter of the year. If you’ve been conscientious about your year-round tax planning, your end-of-year adjustments shouldn’t be too severe. Still, it’s important to consider last-minute shifts in income and expenses before December 31. (We can provide input that should help you make smart business decisions.)
When you make tax planning an important part of your financial decision-making throughout the year, you’ll discover that your income taxes are not as intimidating as they once were.