Whew! Made it through another tax year. Did you end up having to mortgage the farm to pay your taxes this year? Did you pay a little more in taxes than you were expecting? Did you not file or pay your taxes at all because you’re afraid that if you file and can’t pay the IRS will catch up with you and put you through the ringer? It should be you goal that next year’s tax season is much calmer, easier and less stressful.

Many of my clients are small business owners and it seems that they get into trouble each and every year at tax time. The first cause of trouble is generally their procrastination. During the year, they don’t keep accurate records, they throw away necessary receipts, and never reconcile their bank statements. When tax time rolls around they have to spend hours or days (where they could be earning money) separating the records they do have and getting ready to take all of that information down the CPA to “sort it out.”

This poor record keeping is what tends to get my clients in trouble with the IRS. Most of them are very honest when preparing their tax returns, however without the proper backup, they put deductions down and when the return is audited, they simply cannot provide any substantiation and end up owing lots of money to the IRS in taxes. With this underreporting of tax comes penalties and, of course, interest!

This year, make it your goal to be organized from the very beginning. You have no idea how much money you may be paying to the government in taxes unnecessarily each year based on your terrible record keeping. This will help your business to be more profitable, you will be able to write-off more of your business expenses, and you will also be able to verify everything shown on your return, so when the tax man does call for an audit, you can provide back-up documentation for everything and save yourself money paying for extra taxes, penalties and interest.