Depending on your business, you will probably need to file your federal income tax return by April or May. That’s ages away, right? No need to panic yet.
Sure, you could leave things until the last minute. A lot of people do. Twenty to 25 percent of Americans file their return in the last fortnight. These last-minute tax filers often struggle to complete the right paperwork in time. The result? Late penalty fees and a serious headache.
Don’t procrastinate any longer. Hiring a bookkeeper now could help you keep on top of tax compliance, so you don’t have to stress out on Tax Day.
1. Avoid Late Penalty Fees
Imagine the scene: It’s Tax Day, and you still haven’t filed your taxes. Deep down, you know you should have done it days, weeks, months ago. But here you are, facing a mountain of invoices. It’s going to take you a few more days or weeks to get through all this paperwork.
This scene isn’t uncommon. Every year, millions of Americans fail to file tax returns on time, while 7 million fail to file returns at all. Remember, the IRS charges a penalty of 0.5 percent per month of your unpaid taxes. This could cost you hundreds — or even thousands — of dollars.
File your return more than 60 days after Tax Day? You could receive a late filing fee of $135 or 100 percent of your unpaid tax.
Hiring a bookkeeper might cost you money. But it could provide you with a return on your investment. One of these professionals will take care of all those tax-related tasks that you don’t have the time for. Or those tasks you don’t want to complete yourself.
This way, you can avoid those nasty IRS late penalty fees.
2. Keep Your Expenses in Check
Did you know that 30 percent of small companies go out of businesses within two years because their expenses outweigh their profits? These companies are spending way too much money. Often, they only realize the damage when they file their returns.
Don’t be one of the 30 percent. Hiring a bookkeeper now could help you keep accurate records of all your expenses. This includes rent, equipment, insurance, supplies — you name it.
If you’re hemorrhaging cash, a bookkeeper will tell you about it, too.
“An external bookkeeping service has nothing to do with your business. Its goal is to give you a clear insight of your business’s financial position, not to pat you on the back and tell you everything is going to be OK even when it’s not,” says The Balance.
“A bookkeeping service need only do the accounting work required to keep your business up and running and show you its financial strengths and weaknesses.”
Handing over all your paperwork to a bookkeeper might seem odd at first. You’re trusting a complete stranger with your finances. Choose a bookkeeper who has good credentials and referrals and uses the right software. If you are looking for bookkeeping services that will optimize your finances, contact Founder’s CPA.
3. Save Money
Forty-five percent of Americans think their taxes are too high. But, for many people, this is actually true. Some small business owners pay too much in tax. They completely miscalculate their finances. They make huge errors.
One overpayment could amount to thousands of dollars.
Here’s where a good bookkeeper comes in. One of these professionals will make sure your financials are in order. As a result, you could save a serious amount of cash.
A bookkeeper can suggest ways to save money in your business, too. You might have too many employees, for example. Or rely too much on expensive software. A bookkeeper can encourage you to send out invoices on time and maintain your credit rating.
“Although you may think you save money by doing everything yourself, the fact is that a professional bookkeeper actually saves you more,” says Entrepeneur.com.
“That’s because there is a reduced level of risk for human error, lack of knowledge, missed payments and tax obligation due dates and delayed accounts receivable.”
4. Improve Your Payroll Processes
Some small business owners identify mistakes in their payroll when they file their tax returns. At this point, it might be too late to rectify any errors. If you have underpaid your staff in the previous tax year, you could face strict penalties from the IRS. You could even lose your employees in the process or jeopardize your reputation.
Research shows that 82 million workers have experienced paycheck errors. As a small business owner, it is your responsibility to pay your staff the correct wages on time. A bookkeeper can help you do this. One of these experts will improve payroll processing in your organization and spot any mistakes in real time. You can achieve a high level of accuracy and avoid penalties.
5. Reduce Stress
Face it, sorting out your financials in time for Tax Day isn’t the most exciting thing in the world. There are loads of other things you would rather spend your time doing. So why not pay someone to do all the hard work for you?
Using a bookkeeper can help you reduce stress. Plus. you’ll have more time to spend on other areas of your organization. You could focus on your customer service procedures, for example, or marketing. A bookkeeper will take care of all your finances while you complete your day-to-day tasks.
“Hiring someone to do your books (whether that’s full-time, part-time, or on a handful of occasions yearly) means you don’t have to,” says Huff Post.
“That means you get back the time you were spending on record keeping. Depending on how complex your finances and the number of transactions you typically do, this could amount to quite a bit of your own time invested back into your business.”
For many small business owners, Tax Day is their least favorite day of the year. The invoices, receipts, calculations — it’s enough to give anyone a migraine. Hiring a bookkeeper could make tax day far less stressful.
Only 33 percent of small business owners hire a bookkeeper. This is despite all the benefits one of these professionals can provide. Hiring a bookkeeper now will help you avoid late penalty fees and keep your expenses in check. It will also save you money, improve your payroll processes, and even reduce stress.
Looking for a bookkeeper who will make tax season easier? Contact Founder’s CPA today.