Most businesses have to pay quarterly taxes, including sole proprietors, S corporation shareholders, partnerships and individuals. If you expect to make over $1,000 each quarter, you must pay up-front taxes to avoid paying a tax penalty at the end of the year. Staying organized makes paying quarterly business taxes less stressful and quickens the process.
Make the Time to Stay Organized
Instead of throwing invoices, bills, and other documents you’ll need into a pile to file later or hand to your business tax attorney in a big, unorganized pile, create a filing system for any documents you need for taxes. Use one filing folder for each quarter and a fifth folder for documents that apply to yearly filings only.
Inside each folder, add additional folders for different categories including accounts payable, accounts receivable, expenses, and other categories. You could even break down these categories further. For example, in the expenses file, you might divide the file folder into utilities, office supplies, salaries, taxes, and other expenses.
If you can’t stand the thought of a paper file, you can always scan every invoice and receipt and put them into their respective files on the computer.
Download Statements
Instead of leaving statements online, make sure you download them every month and file them in the appropriate file. If you forget and the institution deletes them, you’ll have to jump through hoops to get them.
Keep Your Files Maintained
You need to keep documents for a certain amount of time. However, once that time expires, the files are just clutter. Go through the filing cabinet and clean out your files at least once per month. You can get locked boxes from document destruction companies to hold any files and documents you want to discard. They will be safe from prying eyes as long as they are in the locked shred boxes.
Keep the Previous Year’s Return and Documents Handy
If you are a business, this is usually something you automatically do. However, if you are an individual and are one of those who stash last year’s documents wherever you find a spot, you’re opening yourself up for wasting a bunch of time when it comes to doing quarterly taxes and the next year’s taxes. Having them organized in dated folders for easy access will help save you time.
Keep Checklists for Each Quarter
If you want to estimate your quarterly taxes in an attempt to pay as little as possible, keep a checklist of important tax information. This list includes deductions, depreciation, and other factors. You’ll also want to keep track of what licenses and other taxes you might pay in each quarter since some state taxes are deductions on federal taxes.
Avoid the Underpayment Penalty
If you don’t pay enough taxes on your estimated tax payments, you will most likely have to pay a penalty. To make the proper estimated taxes, you’ll need to figure out your credits for the year. Using the previous year’s taxes can help you. This is especially true if it looks like you are going to make about the same amount of money. Some businesses receive income unevenly. Your best bet is to annualize your income and make unequal payments.
Digital vs. Paper Files
Keeping digital files, as long as you keep a backup, is more secure as long as you have the digital folder password protected. Not every employee should have access to your finances. Limiting access to only those who need that information also mitigates information theft.
When you have a digital file, you can transfer it to a USB drive and hand it to your tax attorney instead of a box full of documents and receipts that might be different sizes. Keeping everything online also minimized the chance of losing a small receipt in a pile of full-size documents. Finally, when you do need to forward the information, a USB drive is much lighter than a box full of files.
Contact France Law
Keeping everything organized and separated for each quarter makes it much easier to estimate your taxes, so you don’t pay in too much or too little. It also helps your business tax attorney complete your tax returns quicker, thus saving you money. Contact France Law for a consultation regarding quarterly and yearly taxes for businesses and individuals.
