Basic Last Minute Tax Tips for Small Businesses
While there is no substitute for a good accountant, a few last minute tax tips can help small businesses meet filing deadlines. Being aware of current tax requirements also makes it possible to provide the essential paperwork your accountant needs to file your taxes in a timely manner. Consider a few basic tips to help make tax season less stressful.
Take a Deep Breath
It might sound simple to take a deep breath but most small business owners get extremely anxious during tax season. They worry about their records, consider if they missed any deposits and sometimes wind up staying up all night obsessing about small details. Relieve your anxiety by stepping away from your financial records for a few minutes. Meditate, do yoga or just watch your favorite television program. Put your mind at ease so you can focus on your taxes without feeling overwhelmed.
Hire an Accountant
Often small businesses are looking to save money. One area you should never compromise is hiring an accountant. A financial pro keeps track of constantly changing rules and knows about the latest deductions. Trying to file your own taxes adds to your stress and maximizes the chance of making costly mistakes. Over time, you save money by hiring an accountant to process your taxes. You can also avoid penalties that could be incurred by your business because you don’t know the latest regulations or updates.
Figure Out Forms
Every type of small business files forms based on how the company is organized. Most small businesses operate as sole proprietors. These businesses report business income and expenses on a Schedule C form. This form is filed with your personal income tax return, which is due by April 15. Other types of businesses may follow a different tax criteria, including partnerships and corporations. Consult with an accountant to find out which form your business should file. If your business structure changes, let you accountant know immediately. If you use legal service, have the lawyer contact your accountant.
Keep Accurate Records
As a small business owner, you wear a lot of different hats. Sometimes it seems like you never get any time to yourself. Often you take shortcuts which later become time-consuming and annoying. One of them is keeping erratic records. While you might understand a system based on your memory and a few sparse receipts, an accountant and the tax department cannot decipher these papers without further interpretation. Use software such as Quicken to keep track of your income and expenses. If you write things down on scrap paper, go through it and write it in a journal. Find a way to keep accurate records that fits into your comfort zone.
Review Possible Deductions
Anything you purchase for business purposes might be a potential tax deduction. Keep receipts for everything you purchase in case it can be used as a tax deduction. Copy paper, pens, printer cartridges and even certain utilities might be write-offs. Review the current tax laws and ask your accountant about possible deductions. If you have a designated space for your business, you might be able to write-off the cost of rent or other expenses. Leave no stone un-turned. Keep track of mileage, dinner receipts and cell phone bills. If the item is not a deduction, your accountant will not include it.
Know About Payroll Taxes and Healthcare
If you pay employees or consultants, is is imperative to keep accurate records and issue any forms they might need to file taxes. Typically these forms must be sent out by the end of January to give them enough time to file their own tax returns. Each year there are updates and changes related to healthcare and payroll taxes. What worked last year might not be the same this year. Be aware of updates and make sure your business operates in accordance with these changes.
Communicate With Your Accountant
Often small business owners expect an accountant to work miracles after one quick conversation accompanied by a box of receipts. This is not enough to make the most of your unique situation. Talk to your accountant every three or four months to get tips and find out the latest updates that pertain to your business. Be proactive about researching small business matters and keeping records. When March comes next year, you will feel less stressed and better prepared to face tax season.