Tax season can be overwhelming, especially for small business owners without a financial background. Implementing efficient strategies and assembling the right support team can make tax preparation easier and set your business up for long-term success.

In this episode of CO— Strategy Studio, CO— VP and Editor-in-Chief Jeanette Mulvey spoke with Jana Kelly, CPA and Partner at Finance Transformation Consulting at Crowe LLP, and Dr. Ronak Mehta, Founder and CEO of NerdBugs. They offered strategies for small business owners navigating the complexities of tax season, broken down here:

  • Kelly emphasized the importance of taking tax deductions, but urged business owners to enlist the help of a CPA to ensure the right deductions are made.
  • Mehta’s business has seen tremendous growth with the help of her financial team, whom she enlisted early on in her career.
  • Kelly and Mehta both recommended early preparation for tax season by planning ahead and creating organizational systems to store essential tax documents.

A trusted CPA can help to maximize your savings come tax season

For many small business owners, the realm of tax deductions remains an untapped resource for potential savings. Kelly pointed out that key deductions — including the qualified business income deduction, asset depreciation, vehicle expenses, entertainment, and meals — often go unclaimed by small businesses.

She suggested collaborating with a CPA who can offer guidance and ensure that your business maximizes its profitability and financial health by correctly claiming deductions.

“It's fair to have tax deductions,” Kelly said. “There's nothing to be afraid of. However, you don't want someone [who] pushes you into something aggressive.”

A trusted CPA can also alleviate the potential for an unhealthy financial situation, which could make your business less appealing to outside lenders or investors, she added.

To find the best CPA for your small business, Kelly recommended looking for a professional who is:

  • In it for the long term (not close to retirement).
  • Able to grow with your business over time.
  • Experienced in your industry/the type of work you do.
  • Staying current with tax law changes.

[Read More: 10 Smart Small Business Tax Strategies That Will Save You Money]

I didn't have any connections in the business space. But … I took chances even though I felt like I was underqualified or not qualified, and I genuinely took interest in the people [who] could help me in these relationships.

Dr. Ronak Mehta, Founder and CEO, NerdBugs

Improve your business’s efficiency by outsourcing financial tasks

As a 2023 honoree of the U.S. Chamber of Commerce’s America’s Top Small Business Awards, Mehta understands the value of a strong relationship with a financial team. Recognizing her limitations in financial expertise, Mehta enlisted the help of a CPA, a bookkeeper, and financial institutions at the onset of her business to help maintain its financial standing — an approach she recommends to other small business owners.

Mehta said meeting with the team regularly has been helpful. Her monthly meetings with her bookkeeper ensure that her day-to-day business operations are on track, while her meetings with her accountant are less frequent and more focused on long-term strategizing and planning.

She also suggested maintaining a clear separation between personal and professional banking.

“Set yourself up for success and just make the account separate from the beginning,” Mehta said.

Building long-term relationships has also proven fruitful for Mehta.

“I didn't have any connections in the business space,” she explained. “But … I took chances even though I felt like I was underqualified or not qualified, and I genuinely took interest in the people [who] could help me in these relationships.”

With these outsourced professionals, Mehta said she’s been able to streamline her financial processes, make informed decisions, and focus more effectively on the growth and development of her business.

[Read More: What Are Estimated Tax Payments for Small Businesses?]

Early preparation reduces the burden of tax management

It’s never too early to begin preparing for your yearly taxes. By having a standardized organizational process designed to simplify the hand-off process with her accountant, Mehta said she has been able to stay ahead and plan for tax season year-round.

For efficient tax preparation for your small business, Mehta suggested setting up well-organized folders on your desktop, which will be useful in the next tax season for identifying the documents your accountant requires. Gather all necessary forms such as W2s, insurance, and healthcare documents, and any additional paperwork needed for tax filing, and organize them into separate folders. This way, when it's time to file your taxes, you can easily locate all the essential documents, avoiding the last-minute scramble to gather them.

Kelly agreed that early preparation is the best approach, and emphasized that the tax season is “all about the planning.”

To make the best tax planning efforts, Kelly recommended completing the majority of a business’s tax obligations before the year’s end, as well as making strategic, tax-deductible purchases before December 31 so they can count toward the current tax year.

“Tax planning is … all about taking a look at the income … you're expecting to have in a given tax year and planning to maximize all of the tax law to your benefit,” said Kelly. “You want to make sure that you're not paying a dollar more than you have to.”

CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.