The past three years have been the most challenging for tax preparers and accounting professionals. From sweeping changes, tax credits, and PPP loans to changing tax codes for individuals, changes to accounting requirements and regulations are the one constant over the pandemic.
This year is proving no different. Through no fault of their own, more people and businesses have filed for extensions this year than ever before — in part due to new K1, K2, and K3 requirements. There’s simply not enough time to get it all done — it’s not anyone’s fault.
We recently published So You Filed an Extension, Now What? Talking about the most common reasons people file extensions in normal years and how to avoid extensions. But what if through no fault of your own — or your accounting team, your extension was unavoidable?
If this is the case, know there are a few best practices for ensuring your ducks are in a row. Doing your part to help your financial team means responding to them in a timely fashion. It’s more than just good business. Doing so ensures that you can streamline the processes associated with tax time and makes this season smoother for everyone.
But what does this mean for you and your business? Here’s a quick run
The Value of Good Bookkeeping
You can accomplish far more and make better decisions with the right information.
Incorrect data results in miscalculations and mistakes in any business. Take NASA, for example. If they miscalculate the launch trajectory by even a fraction of one degree, the rocket will take a wrong turn in space. While an accounting error likely isn’t a life or death situation, it can easily cause headaches during tax season that you want to avoid at all costs.
Keeping your financial data up-to-date and accurate is full-time work, requiring consistent management year-round. As your business grows, having a bookkeeper on your side is not “nice to have,” it’s a must.
So how can a bookkeeper help YOUR business? Here are some of the essential services bookkeepers provide:
- Review financial records to avoid accounting errors due to oversights
- Handle recurring accounting tasks such as account reconciliations, paying bills, and reconciling payroll and other transactional data.
- Performing annual tasks such as preparing, filing, and distributing 1099s, etc.
- Stay up-to-date with industry changes and coordinate and communicate with your tax preparer to expedite the filing process
Knowledge is power, and with a professional bookkeeper at your side, you can ensure you approach your next tax season educated and empowered.
The Value of a Strategic Advisor
A small business owner wears many hats to get the job done. Growing your business means being CEO, accountant, manager, shipping department, and other necessary roles. As your company grows, so will your day-to-day operations, which can quickly become overwhelming.
If this sounds familiar, then it may be time for you to consider bringing on someone who can advise you on the efficiency and profitability of your business. Automated Accounting Services offers strategic advice that empowers you to understand your financial standing and prepare for tax season without frustrating hang-ups. There are a few different types of strategic advisors, and each can fix up your finances and provide unique benefits. How do you know which one is the right fit for your business?
- Controllers are analytical, supporting your business through flawless financial management and reporting. They oversee all accounting operations, including department employees, to maximize profits, savings, and productivity.
- CFOs are more strategic. Their expertise in business strategy is invaluable when evaluating the viability of your business and setting up a business plan. They focus on strategy and operations to support your business by interpreting that data and forecasting how to level up your business.
- Furthermore, business owners can hire fractional CFOs on a part-time basis to provide expert advice on key financial decisions. Best of all, outsourcing this role comes at a much lower cost than bringing in an in-house team member.
Whatever your unique business needs are, Automated Accounting Services will support and fulfill them.
The Value of Preparation
Regular check-ins are a must for success. When you’re unaware of the processes in your business, you cannot successfully manage your team or maximize your productivity. Being too far out of the loop of your operations causes businesses to falter.
To avoid this, attend regular check-ins with your accounting team. Doing so throughout the year ensures you can stay on top of your finances and minimize surprises at tax time. Consider an annual SWOT analysis to review:
- Strengths – high ROI investments, high-performing departments – what makes them successful?
- Weaknesses – low ROI and broken-down processes – what’s causing issues?
- Opportunities – how to improve productivity by implementing successful strategies in weak areas?
- Threats – are there times of the year sales decline? New competitors in the market, etc.?
SWOT meetings are a great tool for evaluating company performance and adjusting business plans and budgets based on that data, but they can only take you so far without all the necessary information. This is why it’s imperative to include your bookkeeper in the meeting. Let your advisor do what you brought them in to do: educate and empower you.
The Bottom Line
Whether or not you filed an extension, making sure that your finances are in order throughout the year is the key to eliminating tax season stress. Keeping financial documents pristine requires around-the-clock management, balancing payable and receivable accounts, bank reconciliation, payroll, and budgeting.
You don’t have to handle it alone. Automated Accounting Services is here to help. Contact us today to get started!