Unless you were super organized and got in all of your information on time, you probably filed for an extension for your federal tax return. That is something you definitely want to do on time just as you would want to file your taxes on time. The last thing you need is to have any issues with the IRS, especially when you’re working on getting your own business together.
Filing an extension gives you about six months to get everything together for your tax professional. You’re probably looking for receipts on some of your business-related purchases or you are scouring through your bank statements to narrow down the amounts for each type of expense. And if you started a spreadsheet for all of this information, then you’re in better shape than you think.
The tricky thing about an extension is that if you do owe taxes, you still have to pay them by April 15th. However, if the amount is more than you can afford, then you want to make sure that you request to pay in installments.
To prepare for next year, you want to start taking action that helps you stay organized. If you’re not quite ready to sit down and create your spreadsheet (assuming you’re just getting started on a small, home-based business with a few expenses), you should designate a large envelope in which you will automatically keep all of your receipts. Stash away receipts from business dinners, office supply purchases, gifts for clients, marketing expenses, and everything related to what you do for the business. Put them all in the envelope and sort them later.
The word I’m not yet saying, the thing you want to avoid, is an AUDIT. You’ve already got enough to stress you out, and an audit shouldn’t be on your list of worries. If for any reason you should be audited, your preemptive organization will prove handy because you’ll have all of the receipts to back your itemized expenses.
While these are just helpful tips, you still want to consult with your tax professional to ensure that you will be able to deduct expenses before you make too many of them during the year. It’s just better to prepare now, even though you’ve just gotten done filing your taxes, so that you’re not caught by surprise next April.