Follow these tax preparation tips and you’ll save yourself a lot of headaches when April 15th rolls around.
The biggest assets you have when tax season arrives are the deductions. They can save you thousands in outgoing tax payments to the IRS, so it behooves the wise small business owner to cherish receipts. Therefore, we highly recommend that you dedicate one specific place to store receipts. This can be an old fashioned envelope that you keep in your glove compartment or a cloth pencil case stored in your briefcase. For the more tech-savvy, check out the numerous receipt-capturing apps out there. These are great because you take a photo of the receipt and immediately file it into an expense category – how’s that for quick and easy?
Anyone who wears the procrastinator’s t-shirt (or works with an owner of the shirt) knows that waiting until the last minute to organize invoices and reconcile receipts is a nightmare. Additionally, waiting until the last minute often causes the reconciler to move quickly through the process, increasing chances of human error. Rather than pushing this tedious task to the back burner, set an appointment each month to work in this area. Or, if you can, hire a bookkeeper or even a high school student to reconcile for you.
The tax laws change every year, so it’s a good idea to know what has changed and what will change in a single tax season. This truth of this statement will be ever true as a new presidential administration takes the helm. We anticipate numerous changes in the coming years. To ensure you don’t miss a thing check in with the IRS website or your trusted tax accountant.
For some, you may have started your business by dipping into your personal accounts. However, as your business grows it is important that you keep your business and personal account separate. That means income, expenses, everything. Even sole proprietorships need distinct accounts as all profits, losses, and liabilities are tied to you personally. Mixing the two can cause serious issues if the IRS conducts an audit.
If your business has employees, it is imperative that the right forms are filled out for each one. Make certain you know the difference between employees who should be on the payroll (W-2) and those that qualify as contractors (1099). Confusing these may lead to penalty fees as well as back payments for Social Security and Medicare. Also, make sure you have proper documentation and identification on file for each employee. You’ll need these should an audit ever occur.
Help take the sting out of April. Instead of paying your business taxes all at once, estimate your quarterly taxes and pay them ahead of time. Looking at your previous tax statements as well as quarterly projections, you can estimate the amount of taxes that you need to pay each month. If you’re unsure how to do this, our small business accounting experts can walk you through the steps.
Few people are more meticulous or more precise than accountants. Their job is to make sure every “i” is dotted and every “t” is crossed – in the math world that is. When it comes to taxes, there is a reason accountants are the go-to people. They know the tax laws and how to efficiently minimize your tax dues. Schedule a time each quarter to meet with your accountant and review your accounts. Not only will this force you to stay current on your records, but the accountant can give you details on potential fees you may be facing, loopholes on which you can capitalize, deductions from which you will benefit, and much more. Think of it as consulting a map while you drive cross-country.
If year after year, you find yourself with your head in your hands, staring down at a messy pile of receipts, spreadsheets, and tax forms, it may be time to call in the professionals. Consider outsourcing your tax and accounting headaches to our team. We actually enjoy crunching the numbers and helping businesses reduce their tax burdens. And while we’re calculating the decimal place and carrying the one, you can focus on growing your revenue, hiring the right employees, and promoting your business. Check out all of the services you can utilize at Pay-tech.com
