Smaller companies should think about mid-year reviews
November 05, 2012
For the owner of a startup, taking care of the company's finances isn't always the easiest task. Though the leader might be an expert in the specific field in which he or she started the business, that doesn't mean they are well-versed in how to record income and expenses, comply with local tax codes or handle payroll.
As such, many turn to professionals for help. A large number of enterprises employ an accountant to manage their financial software, do the company's taxes and act as an invaluable resource for making business decisions.
For this reason, owners may want to consult with these professionals about halfway through the fiscal year. For some businesses that follow the calendar and file early, that may mean in June, but for others who file their taxes at the deadline in April, that could be between September and October.
Find issues early
According to Entrepreneur Magazine, company leaders should think about getting their finances in order half way through their fiscal year because it can not only serve as a practice run but it can help administrators gather information early so that the first half of calculations is thorough.
Done right and efficiently, USA Today explained, an estimate taken halfway through the fiscal year can last around an hour - notably less than a year-end push. The source also explained that though no one can predict changes that might occur within the tax code six months from now, if finances are in order, it can be easier to cope with them if an alteration were to occur down the road.
USA Today related mid-year tax preparations to doing housework, noting that if you can get a little done at once, when it comes time to tackle the final project, it will be a much easier and a smoother transaction. Moreover, the final tax estimate will most likely take less time and can save money, becauseprofessionals have had more time to find deductions and other credits.
Helps with organization
If a company's leaders take initiative and calculate their taxes halfway through the year, they can also dispose of their receipts earlier. Entrepreneur explained that when they record their fiscal data early, managers can take that opportunity to transcribe information on receipts and store them on their computers.
This can free up a lot of space in filing cabinets and on the leader's desk and allow them to start saving receipts again for the rest of the year. This can make the end of the year much easier, the magazine explained, and only takes a few hours.