3 Ways Accounting Websites Help You Prepare for Taxes
When do you start thinking about preparing for income taxes? Late in the year, so you can make last-minute charitable contributions? When your 1099s and W-2s start rolling in? Later than that?
Your income tax obligation should be at the back of your mind whenever you work with your income and expenses. You won’t know for a fact exactly how much you’ll owe (or receive as a refund) until the forms and schedules are all filled out, but ongoing tax awareness and planning will minimize the chances of a major surprise.
Cloud-based accounting applications can help you prepare for preparing taxes throughout the year. Here’s how:
They help you keep a constant watch on income and expenses. Accounting websites make it easy for you to create records for your customers and suppliers and products/services. You can use this information as you create transactions like invoices and purchase orders, with each assigned to one of the site’s core accounts. A subset of the full site’s tools is accessible on mobile devices like smartphones (and integrated with your company files), which is especially critical when you need to enter an expense on the road.
Mobile apps that are integrated with cloud-based accounting applications make it easy to enter expenses when you’re out of the office.
They allow your financial advisor to access your online data. Cloud-based accounting application developers do a commendable job of making a complex process – double-entry bookkeeping – understandable to small business owners who don’t have any training in accounting procedures. They deal with debits and credits in the background while you work with familiar-looking forms.
Still, you’re likely to want the help of a financial advisor when you decide to tackle your company’s financials using an accounting website. You may even want to enlist the guidance of a professional before you decide which site to use. Simplified as these applications are, they still require some knowledge of accounting workflow.
So cloud-based accounting websites make it possible for accountants to log in and assist when needed. Some even include special tools designed specifically for their level of expertise.
They can generate periodic reports that minimize surprises when it’s time to file.
Cloud-based accounting websites come with numerous pre-built report templates that you can run automatically using your own data.
You’ll have a vague understanding of tax-related income and expenses as you watch your daily transactions. But customizable, comprehensive reports will make the picture much clearer. You’ll want to run some of these yourself, like aging and budget reports. Your accountant, though, create and analyze more complex reports that will help you understand where you are in terms of your income tax obligation so you can take any steps needed to legally minimize it.
A cloud-based accounting application can’t prepare your taxes. But it can certainly simplify the job for whoever does, as well as give you important insight throughout the year.