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Written by: Vera
As the end of the financial year approaches, businesses across the US are diligently gathering documents and organizing expenses to ensure IRS compliance. Enforcement efforts are particularly strict this tax filing season, heightened by the IRS’s intensified enforcement efforts which now target 125,000 cases of unfiled tax returns.1
To alleviate the stress of tax filing, Business admin experts at Vera have shared their advice on how to streamline the tax filing process and navigate the busy tax season more effectively.
Tax season is often a time of high stress and urgency for businesses, but with consistent attention to key tasks throughout the year, it doesn’t need to be. By incorporating AI tools into a proactive approach to tax management, businesses can streamline the filing process even further, improving accuracy, minimizing the risk of financial errors, and ensuring that all available deductions and credits are identified and maximized.
These year-round strategies contribute to long-term financial stability, help businesses stay compliant with IRS requirements, and reduce the pressure of last-minute filings. Beyond compliance, effective tax planning combined with AI insights becomes a strategic growth tool, positioning businesses for sustained financial health and success in a competitive landscape.
1. Maintain accurate and updated records
Maintaining accurate and up-to-date financial records is essential for a smooth tax filing process. By consistently recording all income, expenses, and receipts throughout the year, businesses can not only avoid the last-minute rush to organize their financial data but also ensure that every detail is accounted for.
This ongoing diligence helps to prevent any critical information from being overlooked, ultimately leading to more accurate tax returns and reducing the risk of errors or missed deductions when it's time to file. Additionally, well-maintained records can streamline other financial processes, contributing to overall business efficiency.
2. Automate payroll processes
Automating payroll processes ensures that employee taxes, including federal income tax and Social Security contributions, are accurately calculated and submitted on time. This minimizes the risk of errors and potential penalties from the IRS and saves businesses valuable time and resources.
By streamlining payroll through automation and AI tools, companies can reduce administrative burdens, allowing them to concentrate on other critical aspects of their operations. In turn, this enhances overall efficiency and ensures compliance with tax regulations, while contributing to smoother financial management. There are many AI tools that can help organize this task, such as Vera, saving you time and effort in the long run.
3. Review expenses monthly
Regularly reviewing expenses is key to effective tax management. With the help of AI tools that categorize and track expenses in real time, businesses can ensure each item is properly recorded for tax purposes. AI can also detect patterns and anomalies, ensuring that all allowable expenses are identified and claimed correctly, maximizing tax deductions and simplifying the end-of-year reconciliation process.
This proactive approach not only helps prevent confusion at tax time but also maximizes potential tax deductions by ensuring that all allowable expenses are correctly identified and claimed.
4. Track mileage and travel expenses
For businesses with substantial travel activities, tracking mileage and travel-related expenses in real-time is crucial. Using apps or spreadsheets to record these details ensures precision and reliability, using AI tools, you can automatically track these details with precision, making it easier to claim deductions and reduce taxable income. This approach not only facilitates the accurate claiming of allowable deductions but also helps in effectively reducing taxable income.
5. Consult with a tax advisor quarterly
Regular consultations with a tax advisor are instrumental in keeping businesses well-informed about any changes in tax legislation and ensuring continuous compliance with IRS requirements. AI-powered financial platforms can complement these consultations by analyzing tax trends and providing predictive insights.
These meetings offer a valuable opportunity to explore potential tax-saving strategies and address any emerging concerns before they develop into more serious issues. By engaging with a tax advisor consistently, businesses can navigate complex tax laws more effectively, stay ahead of regulatory changes, and make informed decisions that enhance their financial health and reduce the risk of costly errors.
6. Organize receipts and invoices digitally
Digitizing receipts and invoices serves not only as an effective space-saving measure but also guarantees that crucial documents are easily accessible whenever required. Well-organized digital records streamline the tax filing process by providing a clear and efficient way to manage financial documentation. AI-based management systems can automatically categorize, store, and retrieve financial records, significantly simplifying the tax filing process.
This approach not only simplifies day-to-day record-keeping but also proves invaluable during an IRS audit, where quick access to accurate and complete records can significantly ease the review process and help ensure compliance with tax regulations.
7. Monitor cash flow regularly
Regular monitoring of cash flow is essential for financial management. By closely tracking cash flow throughout the year, businesses gain valuable insights that enable them to make well-informed decisions and manage their finances more effectively.
This ensures that businesses maintain adequate funds to meet their tax obligations as they come due, preventing any last-minute financial strains. Additionally, ongoing cash flow analysis helps identify potential financial challenges early, allowing businesses to address issues proactively and maintain overall financial stability.
8. Reconcile bank statements monthly
Monthly reconciliation of bank statements is a vital practice for ensuring that all transactions are accurately recorded and accounted for. AI-powered accounting software can help match transactions with bank statements, identifying and resolving discrepancies quickly - making the job quicker and easier.
By regularly comparing bank statements with internal records, businesses can promptly identify and resolve any discrepancies, preventing potential issues from escalating. This approach not only reduces the risk of errors in tax filings but also enhances the accuracy and efficiency of the tax submission process.
9. Stay updated on tax deadlines
Missing a tax deadline can lead to penalties from the IRS, which can significantly impact a business's finances. By staying vigilant about all relevant tax deadlines and proactively setting reminders, businesses can ensure they meet their filing and payment obligations on time.
This not only helps avoid unnecessary fines and interest charges but also adopts better financial planning and reduces the risk of last-minute stress. Timely compliance with tax deadlines ensures smooth operations and helps maintain a positive relationship with the IRS which supports the business's overall financial health. AI tools can be great for this, as they analyze real-time data to keep you up-to-date on the latest tax rules in your state.
10. Conduct a year-end review
Conducting a thorough year-end review is essential for businesses to finalize their accounts and prepare all necessary documentation well before the tax filing deadline. This process enables businesses to identify and address any discrepancies or required adjustments, ensuring that their financial records are precise and complete. By examining and verifying account details ahead of time, businesses can enhance the accuracy of their tax return, minimize the risk of errors, and avoid last-minute issues.
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[1] Reuters | US IRS aims to collect on 125,000 unfiled high-income tax returns