Where small businesses go wrong at tax time
April 17 marks a date that very few US small businesses look forward to — the 2012 tax deadline. Many of these businesses are scurrying to get their financials in order shuffling through paper, checking old emails for receipts, and thinking about how next year things will be different. Others are relying on their accountant to clean up their mess.
As the infographic above shows we recently ran a survey across more than 500 accountants in the US and asked them what are some of the pitfalls that small businesses get into around tax time.
The number one mistake that small businesses make is not having ongoing insight into their finances throughout the year. So here we are, days away from the tax deadline, and there are tons of small businesses spending hours upon hours getting their finances in order. But why?
Talk to any small business and they’ll likely tell you that doing their accounting ranks just above doing the laundry. A lot of the distaste for accounting comes from poorly designed software that doesn’t “think like a small business thinks”.
The second biggest mistake according to accountants was that small businesses only talk to their accountant at tax time. Almost a quarter of the accountants we surveyed think that contact with a small business should be weekly. Yes, that’s 52 times a year. But that contact doesn’t have to be in the flesh.
With online accounting software, much of the bookkeeping work can be automated and/or done remotely. For the accountant each of those client contact touch-points can be as simple as a comment or note attached to a certain piece of financial data. For the small business owner it’s possible to immediately view the comment or note on their iPad over Sunday brunch. The result is key business decisions get made long before tax time.
A whopping 71% of accountants believe that having real-time access into their small business client’s financials would enable them to provide better advice. And better advice throughout the year leads to better results at tax time.