5 Post-Tax Season Tips for Small Business Owners

5 Post-Tax Season Tips for Small Business Owners

by Brendon Pack, May 2017

Another tax season is in the rear-view mirror. If you didn't file for an extension of time, your IRS filing requirements should be completed for now, but the self-employed have plenty of ongoing requirements throughout the year.

So, as a small business owner, what should you be doing now that the heavy lifting is done? Consider making these five moves.

1. Review Your Tax Strategies

Sit down and take a close look at how tax season went for you this year.

  • Did you take full advantage of all personal and business tax deductions, credits, and other tax-saving measures for which you were eligible?
  • Did you get your personal and business returns submitted on time, and were you comfortable with those deadlines?

By conducting this review, you can determine if there are additional tax planning strategies you could use next year to reduce your overall tax liability or to make the spring tax-filing season a little less stressful. Being more organized can be a huge help in the future.

2. Spend Time on Your Bookkeeping

During tax season, you may not have had ample time to update and work on your books. Now is the perfect time to do that.

  • Post any new transactions that have come in, and see where things stand now in the second quarter of the year.
  • Check up on your profit and loss records, and review your cash flow. You can compare this data to previous years, if you've been in business that long, to get an idea of the progress you've made.

If you're still using an informal bookkeeping platform like a simple spreadsheet, now is also a good time to upgrade to cloud-based software that can improve your accuracy and save you lots of time.

3. Conduct a Financial Review and Forecast

See where things stand with the overall financial status of your business.

  • How have your profits fared since January 1?
  • How much money have you had to spend on unanticipated costs?
  • Are you on track for a solid year overall if your sales stay consistent?

In addition to examining your business finances, do the same with your personal financial picture. Your income from any nonbusiness sources and your personal expenditures can all factor into the overall success of your business and your future standing as a taxpayer.

4. Review Your Estimated Tax Payments

Owning a business involves earning 1099 contract income. As such, you're responsible for making quarterly estimated tax payments to the IRS.

There's a chance that you've been faced with large tax bills in the past, or perhaps you've received substantial tax refunds. Whichever is the case, this could be a sign that you need to adjust your estimated tax payment amounts. This can be done by keeping close tabs on your business income and then making more appropriate estimated tax payments.

While a big refund may be nice to receive, it means you're overpaying during the year. On the other hand, you aren't paying enough if you are getting a big bill from Uncle Sam each year. Adjusting your estimated taxes can put these figures on a proper track, and you'll find you become more adept at paying them as time goes on—and as your small business prospers.

5. Open and/or Contribute to a Retirement Account

You absolutely should have a retirement plan in place, whether you're a business owner or not. So, either open one, if you need one, or make sure you contribute to the one you have—and do it sooner rather than later. Entrepreneurship comes with lots of uncertainty, which makes saving for the future even more critical for the small business owner.

A traditional IRA and a Roth IRA, each of which offers different tax advantages, are just two of the retirement plans from which you can choose.

While it's tempting to close that 2016 tax file and head for the door, if you can take just a few minutes to learn from last year's experience—by implementing one or more of these five actions—your future self will thank you when the 2017 filing season comes around.