It’s about time you put your financial foundation in place. The quicker you can actually file your tax return, the better you can stay focused on what's in front of you and what's ahead of you.
What Does Closing Your Year-End Look Like?
Closing your year-end means that you have to get your finances in order as a business owner. It means making sure you've accounted for all your income and expenses. Depending on how you're structured, you also have to account for your assets and liabilities. Collect the data and present it in a way that can be easily read and interpreted for tax return.
If you don't have an accounting platform such as Xero, at least sit down with a spreadsheet and pull together information around your income and expenses, whether it be from your bank statements, your credit cards, and tax forms that get issued to you every year.
This is very important because those are the things the IRS cross-checks so make sure those things are reported correctly on your tax return.
2 Reasons People Fail to File Their Taxes on Time
- They don’t have the logistics. They don't have their books caught up and they don't have the data in which to file their tax return.
- They don't have the money to pay the taxes they owe. So they end up pushing off perpetually because they don’t have the money to pay for it.
Strategies to Put Your Financial Foundation in Place
- File early and not up to the deadline.
Get a plan to pay it sooner. Otherwise, delaying the filing of your taxes because you don't have the money will only incur a penalty for not paying on time. Then you end up using this year's money to pay last year's taxes.
- Put an installment plan in place with the IRS.
When you haven't got any other sources to pay the tax revenue, ask the IRS to set up an installment plan for you. It's pretty easy once you go through the process and they're pretty lenient as far as your capability of paying.
- Commit yourself to it.
Dedicate 90 minutes of your time every two weeks to the financial side of your business.
Do all of these and you’ll realize the year-end is a relatively simple, stress-free close!
If you want to learn more about how to close your year-end timely, check out 039: Closing Your Year-End 2020 For Tax