By Analytix Editorial Team
The income tax filing season can be a difficult time for many business owners. The IRS is flooded with inquiries from exasperated businessmen regarding tax filing from February till May each year. If you are one of the people who need guidance on your tax issues, browse through the official Internal Revenue Service website www.irs.gov/ for guidance and information.
There are 2 perennial problems businessmen face when it comes to tax preparation:
• Poor Record Keeping
• Keeping Up with the Changing Tax Laws
Problem 1: Poor Record Keeping
Poor record keeping is the problem for most businessmen who are busy in running a business and keeping it profitable. All records of transactions in and out of the business are carelessly kept to the extent that sometimes they don’t know where their business stands financially. At the time of filing business tax, these businessmen are hence clueless. Some businessmen use their checkbooks as records, but face problems when they can’t locate their check registers. Even more disorganized are those businessmen who keep documents in piles or boxes and are referred by CPAs as “shoebox clients”. Such businessmen, at the time of tax filing, miss out on important tax deductions due to lack of documented proof.
The solution to this problem for businessmen is: get professional help. For all business documents, record keeping and ledgers, a professional bookkeeper should be hired. If a dedicated bookkeeper or bookkeeping service provider is looking after all documents, the businessman need not worry about maintaining his records from day-to-day. This way, at the time of tax preparation and filing, precise information will be available with documented proof.
Problem 2: Keeping up with Changing Tax Laws
Most businessmen also do not have the time to keep up with the constantly changing taxation laws. It is difficult for them to discern which law is applicable to them and which one is not. For example, many states’ laws differ from the Internal Revenue Code and require separate calculations.
In case of inability to follow the law changes, a businessman should hire a tax professional or tax advisor. Such professionals are updated with the latest changes in all laws related to taxes, and will be able to easily keep track of them. They will also be able to spot the applicable laws in respective situations. You can also regularly check the IRS website www.irs.gov/ for the most updated information regarding laws of tax filing.