Top Tips for Increasing Tax Write-Offs

How to get the most from your online bookkeeping software with tax write-off tips from experienced virtual bookkeepers.

Tax preparation can intimidate even the most experienced small business owners – from those who invest in virtual bookkeepers to those who opt to DIY their books. The amount of work often required to prepare small business taxes can be daunting to entrepreneurs already stretched for time, and the process can be even more of a headache if your books aren’t current. With the help of Artificial Intelligence and dedicated virtual bookkeepers, at Decimal we can help keep your accounts updated in real-time, making tax preparation substantially easier for all types of small businesses. And as part of one of the largest accounting firms in the country, our virtual bookkeeping team members know a thing or two about tax preparation and how to help increase write-offs on your returns.   

Read on for advice on how to make the most of business tax write-offs, from our experienced team of virtual bookkeepers:

Before Tax Season: Establish Smart Accounting Practices Now to Save Time Later

Reconcile Expenses Regularly

Successful business owners know to think about their write-offs all year round – not just during tax season. Maintaining up-to-date books will ensure that all business expenses are documented and accounted for, which will help substantially when it does come time to file. If you currently use DIY online bookkeeping software, make time to categorize your small business expenses at least weekly while purchases are still fresh in your mind. If your business is at the point where categorizing expenses regularly is no longer feasible, consider switching over to managed account, which uses AI plus a virtual bookkeeper to categorize expenses in real time.

Keep a Mileage Log – and Update it In Real-Time

If you drive a car for your business, be sure to also keep an up-to-date mileage log with all dates of travel and distance traveled for business activities. This is especially important if your business necessitates a great deal of driving, as total mileage can add up. Consider using a mileage log phone app to make the tracking process more automated and seamless.

During Tax Season: Lean on Your Virtual Bookkeeper and CPA

Review Your P+L Closely

With the help of AI technology and your virtual bookkeeper working in the background, you can quickly pull a real-time Profit and Loss statement from the online bookkeeping software and review it closely for any inaccuracies. Examine each expense category to make sure everything is categorized correctly, or have your dedicated virtual bookkeeper do this for you before handing the document off to your accountant. Look out for any large purchases that may have been missed, such as items that were accidentally purchased on a personal credit card instead of your business account. 

Make your Accountant’s Life Easy

You’ll be far more likely to get the most out of tax preparation if you are organized, thorough, and approaching tax season with your books in order. Whether you use a virtual bookkeeper or have someone who manages your books in-house, loop them into the conversation with your accountant and work together to get to an advantageous outcome for your business. If you make it easy for your accountant to prepare your tax return, they are far more likely to have time to provide you with valuable tax prep help – advice that may save major dollars.

After Tax Season: Strategize with your Virtual Bookkeeper

Book a Strategy Session

After preparing and submitting your taxes for the year, it’s time to start thinking smart for the year ahead. Speak with your bookkeeper and revisit your financial reporting and income statements from the previous year. Discuss potential changes to projected income for the coming year, in addition to any new recurring or one-time expenses that you anticipate in the forthcoming year. By looking at the big picture up front, your bookkeeper will be in a better position to help you manage your finances.

Reevaluate your Systems

If tax season was a time-consuming headache for you this year, the problem may lie with your bookkeeping system. Take time to evaluate the different small business accounting options at your disposal, and the features that are right for your unique situation. Many business owners feel that they have no other choice but to go with a DIY accounting software, but today’s online accounting marketplace offers many new and innovative choices. Decimal is an online accounting system that can help to make the process substantially more seamless for entrepreneurs.

With the right systems in place – and the right knowledge at your fingertips – you’ll get the most out of tax preparation every year, all while saving time and reducing your stress levels.  

‍