Tax season is upon us. For small business owners and independent contractors, that means that you’ll have some extra steps to go through compared to employees who receive a W-2 from their employers. So we’re going to give you a few tips throughout the month on how to get through it.
Tip #1: Prepare Your Profit & Loss Statement Early.
Like the name states, a Profit and Loss Statement at its simplest will show your business’ revenue and the expenses that factor into your earnings. The more complex your business happens to be, the more complex the statement might end up. But you’ll need it in some form or other to handle your annual tax filing.
Most accounting software will provide the ability to make a Profit and Loss statement if the information happens to be entered accurately. However, for business owners who haven’t invested in accounting software, it can be very time consuming to make sure everything is accurate—which is a necessity since it is needed to help file your tax returns and make estimated self-employment tax payments.
So don’t wait until the last minute. Start early on preparing your Profit and Loss Statement for the year, even if it takes an hour or two every day. And once you’ve done it, keep recording the information going forward. That way you won’t need to start from scratch next year.
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