Tax planning now for 2013
Tax season can be an exceedingly stressful time for many businesses. All too often, companies don’t consider a tax strategy or maintain necessary records, forcing them to scramble at the last minute to locate vital information. However, taking a little bit of time throughout the year for proper planning and maintaining important financial reports can alleviate some of the stress of the season and ensure you are well positioned for your year end.
Below are documents you can work on throughout the year to prepare for tax time.
- Profit and loss statements. When tracking your company’s profit and loss, the more information the better. Be sure to include both a monthly and annual comparison of what your business is doing this year versus last year. Your statement should also show how it compares to your budget. Communication is your friend; when in doubt, don’t be afraid to ask your accountant what he or she would like to see.
- Operating expense report. Be sure to track not only what you spent but what you spent it on. Itemize your operating expense report. While most companies will break down their expense reports by category, for example, “advertising and promotion,” many won’t break it down any further. It’s important to keep track of the expenses that contribute to each of the individual categories, and this is much easier to do on an as-you-go basis throughout the year.
- Sales report. Almost every company tracks revenue, but what they often fail to track is where that money is coming from. Breaking down your sales by client will help illustrate your client base, identify your ideal client profile and help you track the success you’ve had in attracting more of them.
- Tax report. Many companies pay quarterly estimated taxes, and if this is your situation, you will want to keep a running record of all taxes paid. If you have a better year than initially anticipated, you may choose to pay more than the estimated amount in order to lessen the tax burden at the end of the year.
- Balance sheet. While most business owners and CFOs tend to favor their profit and loss reports, the balance sheet provides an up-to-the-minute snapshot of the company’s financial position and gives your accountant valuable insight into the overall well being of your business.
- Business report. Before meeting your accountant, create a one-page report that describes how your business performed last year and why. What were the major challenges you faced? How did you overcome them? Has anything changed for your business this year as compared to last?
Planning ahead and maintaining the reports listed above throughout the year can minimize the demands on your personnel at fiscal year end and help relieve some of the stress that comes along with it.
For more information on how your business can better prepare for tax season, contact your trusted LGT advisor or Brad Gross, partner-in-charge of the tax department at (214) 461-1406 or at firstname.lastname@example.org.