How Can I Save Money on Tax Return Preparation and Keep My Tax Bill Low?

Question: How Can I Save Money on Tax Return Preparation and Keep My Tax Bill Low?

Every business owner wants to save money on tax return preparation and to have the smallest possible tax bill. These tips can help you save your tax preparer time (which translates into money) and increase your accuracy and the number of deductions you claim, which will decrease your tax bill.

Answer:

Tip #1 - Start Early
Starting early gives you time to read about deductions (on this GuideSite, for example) and to look for all the deductions you can possibly take. It isn't too late to start early. Check out my Save on Taxes article for a list of deductions you might have missed. Then get to work documenting these deductions. The more legitimate deductions, the lower your net income and the less tax you will pay.

Tip #2 - Follow Directions, Read the Forms
Unless you have the simplest of business tax returns, you will need a tax preparer. But that doesn't mean you can ignore the forms you need to file. Reading through the forms, or looking them up on this site, can help you be prepared and save you from scrambling in April. For example, if you want to take a home office deduction, read through Form 8829 so you know what information is needed. For corporate forms, read through the list of information you need to prepare form 1120 (corporations) or to prepare Form 1120-S (s corporations). Reading through this list can help you make sure you aren't missing anything.

Tip #3 - Be Organized
The better you organize your return paperwork, the more quickly and efficiently your tax preparer can work. For example, separate out paperwork on equipment and vehicles you purchased during the year, so your preparer can calculate the depreciation deduction. Put all home office deductions into a folder, including documentation on direct and indirect costs. Being organized also helps you see what you might have missed.

Tip #4 - File and Pay on Time
You can always save money by filing on time. Late filing penalties eat into any refunds you may receive, and penalties for failing to pay estimated taxes when due are an unnecessary expense. Get your calendar in order so you don't miss tax deadlines.

Tip #5 - Give Your Preparer Time to Work
Rushing your tax preparer to get your return done by April 15 (when you brought the paperwork in on April 10) won't win you any friends and it may cause your preparer to miss deductions. If you will have to rush your preparer to get done by April 15, get an estimate on the tax bill, pay the estimated taxes, and file an extension request.