Tax Preparation is NOT Tax Filing

Tax preparation isn’t something you want to do when its time to prepare your tax returns. Wikipedia tells us tax preparation is …the process of preparing tax returns, often by a person other than the taxpayer. The IRS, with its typical fine print, does tell us something useful about tax preparation. The first sentence begins with “Well-organized records…”

My definition of tax preparation can be boiled down to “putting yourself in your best position to present your information to the IRS”. In other words, be prepared before you file your tax returns.

Tax preparation is an ongoing process you practice every day in your small business and your personal financial lives. However, September is a good time to meet with your tax preparer to determine what adjustments you may need to make before it’s time to file your taxes. The very last thing you need when you file your taxes is a surprise that isn’t very pretty.

There is also a big difference between what you do before you keep that September appointment with your tax preparer and what you do during that appointment. Bring your stuff with you. Ask questions, refocus, explore your options, make a plan and get with it! This might even take more than one appointment, but when you do file your tax returns, you’re prepared. You’ve already done your tax preparation.

There’s a big difference between tax preparation and tax filing. Don’t get the two mixed up. Come February, do you really want to show up at your CPA’s office with a box of receipts, a year’s worth of bank statements from four accounts and a plastic storage bin of paperwork? As a small business owner or an individual, wouldn’t you rather know what surprises might be hiding in all that stuff before you’re counting down days to the deadline?

Tax preparation is done when there is time to do it, and when you, the taxpayer, have time to make adjustments or prepare for something that could potentially be devastating at worst or a not-so-pretty-surprise at best. Of course, there are certainly times and circumstances when you realize you’re not as well-prepared as you would like. Make an appointment with your CPA or accountant as soon as possible.