Tax season is just around the corner, and for many small business owners, it’s a time filled with stress and last-minute scrambling. But it doesn’t have to be that way! With the right preparation and mindset, you can navigate tax season confidently, stay compliant, and even uncover opportunities to save money.

In this guide, I’ll walk you through six actionable steps to get organized and ready for tax season. Whether you’re super prepared or need a bit of a push, these tips are designed to make the process as smooth as possible.

1. Gather and Organize Essential Documents

This may seem obvious, but organizing your financial documents is the cornerstone of a successful tax season. Start by creating a checklist of items your tax professional will likely need. Here are some common ones:

• Year-End Bank Statements: Include all accounts related to your business.
• Credit Card Statements: Especially for cards used exclusively for business expenses.
• Loan Documents: Include interest statements and balances.
• 1099s: If anyone gave issued you a 1099 for work you performed as an independent contractor
• Receipts for Major Purchases: Items like equipment or renovations over $2,500 should be documented.
• Mileage Logs: Accurate records are essential for claiming this deduction.

Pro Tip: Use a scanning app like DocScan to digitize paper documents. Save them in a secure folder to streamline uploading for your tax professional.

2. Know Your Tax Deadlines

Understanding your deadlines is critical to avoiding penalties and stress. Here’s a quick overview:

• S Corporations and Partnerships: Due March 15 (or March 17 in 2025, since the 15th is a weekend).
• Sole Proprietors and Single-Member LLCs: Due April 15 and included in your personal 1040 tax return

If you’re not ready to file by these dates, don’t panic—extensions are available. But remember, an extension to file is not an extension to pay. Make estimated tax payments on time to avoid interest and penalties.

3. Review and Prepare Your Bookkeeping

Messy books? You’re not alone, but now’s the time to clean them up. Whether you handle bookkeeping yourself or work with a professional, here’s what to focus on:

• Reconcile Monthly Transactions: Ensure all income and expenses are properly categorized.
• Document Loans: Break down payments into principal and interest.
• Payroll Entries: Separate employer taxes from employee withholdings.
• Include Personal Funds: If you used personal funds for business expenses, document them and provide details.

Tip: If your books are behind, let your tax professional know. Filing an extension may be necessary, but communication is key.

4. Prepare for and Track Estimated Taxes

Paying estimated taxes is essential for avoiding hefty tax bills. Here’s how to stay on track:

• Calculate your net profit every month.
• Save at least 25% of your net profit for taxes.

If you’re unsure how to handle estimated taxes, check out Episode 15 of the Financially Adjusted podcast for a deep dive.

5. Communicate with Your Financial Team

Collaboration is the secret sauce to smooth financial management. Here’s how to foster effective communication:

• Introduce your bookkeeper to your tax professional.
• Use cloud-based accounting software like QuickBooks Online, which allows both professionals to collaborate in real time. You can add your bookkeeper and tax pro as accountant users.
• Be proactive about providing updates, such as new accounts, loans, or major purchases.

When your financial team is on the same page, you save time and reduce the chances of errors.

6. Plan for Taxes Year-Round

Tax planning isn’t just for tax season! By meeting with your tax professional at least once a year, you can take advantage of tax-saving strategies that need to be implemented before December 31.

Examples of proactive tax planning include:

• Contributing to a retirement account (e.g., a Solo 401(k) or SEP IRA).
• Taking advantage of available tax credits, like those for starting a 401(k).
• Planning equipment purchases to maximize depreciation deductions.

Reminder: Even with a professional team, it’s your responsibility as the business owner to stay informed and proactive. No one knows your business better than you and you can’t expect anyone to care about your business more than YOU!

Bonus Tips for Staying Ahead Next Year

If you’ve struggled this tax season, use it as a learning opportunity. Here are some ways to get ahead next year:

• Schedule check-ins with your tax professional throughout the year.
• Automate bookkeeping tasks using software like QuickBooks.
• Keep a digital folder for receipts, statements, and other documents so everything is in one place. Keep this up to date!

Tax season doesn’t have to be overwhelming. By following these six steps, you can reduce stress, maximize deductions, and confidently tackle your taxes. Remember, it’s never too late to get organized, and every step you take today sets you up for greater success in the future.

For more tips and resources, check out the Financially Adjusted podcast and download my free tax guide.

Here’s to a stress-free tax season!