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Why Tax Season Is Just Getting Started For Entrepreneurs

by Muriel Vega

Organization is key when tax season comes around, but for entrepreneurs, tax season never ends. With changing incomes and laws to outside investment and staff influx throughout the year, tax season starts the day a founder files their last tax return with the government.

accountfully-brad“A proper tax strategy is always a year-round process. It’s not something you can wait to address in Q4 or next April,” says Brad Ebenhoeh, who serves as managing partner at startup-focused accounting firm Accountfully. “The best process that you can have is once the tax return is filed for your business, you will review it with your accountant to understand what happened and plan appropriately for next year.”

Here’s what Ebenhoeh recommends startup founders stay on top of throughout the current tax season to have a more seamless filing next year.

Review your tax strategy with your CPA

Following the filing, review revenue and business goals with your accountant to adapt your tax strategy moving forward and put your business in the best position. “At that point, you can review future plans like new overhead, prospective investments within the company or from outside investors, projected revenue and other factors,” says Ebenhoeh.

Look for tax credit renewals

If your startup qualified for tax credits, be sure to check on their renewal dates and whether or not you still qualify. In the same vein, Ebenhoeh shares that with changing laws surrounding technology hubs and progressive cities, you may qualify for new credits, from investor tax credits to new job credit. If you’ve moved offices, you may have entered an Opportunity Zone.

Review the books on a quarterly basis

Set up a regular meeting with your accountant to review the books and “understand what happened in the past and, looking forward, the projected revenue and upcoming profits to see how it will impact the next tax filing,” says Ebenhoeh. If your startup moved from internal product testing to a public launch, you may need to add sales tax to your income and if applicable, add a research and development credit to your tax strategy.

Stay alert to unforeseen costs

From hidden costs of labor (insurance, payroll tax, equipment, etc.) to outsourcing expertise depending on your startup’s needs, try to plan for unforeseen costs and their impact on next year’s tax filing. If the sudden costs affects your cash flow, meet with your accountant to adapt your current tax strategy to the new reality of your business.

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