How to Survive Tax Season for Business Owners
Taxes are due in a week! This day sneaks up on many small business owners who have the responsibility of filing their business’s taxes. If you dread filing taxes every year, check out our ideas for small business tax preparation, so that you can make it a painless process. Next year, consider these small business tax tips, and your tax season will be stress-free!
1. Make it a year-round effort – Instead of panicking around tax season, keep track of all of your expenses throughout the year. Small business tax planning that is gradually completed is going to be much easier than rushing to file weeks prior to Tax Day!
2. Separate business and personal expenses – Taxes aren’t a mix and match process, so that means don’t file your personal expenses and business expenses together! Keep both areas of your finances organized from the start and you won’t risk accidentally overlapping them when it comes time to file your taxes.
3. Head back to school –If you take classes relating to your business or skills necessary to running it, you can write up those expenses as a deduction. It’s a win-win – you’ll gain additional qualifications that will make you a better small business owner, and you’ll have another deduction on next year’s taxes.
4. Hire a pro – Find an accountant who has experience doing taxes for small businesses. Having a professional by your side will help you file correctly, and if this person has expertise on small business tax preparation, you’ll be even better off! If you can’t afford to hire an accountant, consider applying for additional working capital to pay for these costs.
5. Invest in accounting software – While it can be beneficial to hire an accountant, there are always plenty of accounting software options. By utilizing accounting software, you can take small business tax preparation into your own hands. You’ll be able to generate expense reports, profit and loss statements and balance sheets, and can easily manage both your personal and business accounts. This will likely make filing taxes a breeze!
6. Learn from last year – Review the previous year’s tax return, so you can evaluate how you can improve your business. Measure growth, and consider what you’ll spend on your business in the following year, and what expenses you can potentially eliminate.
7. Employee status – Pay attention to how your workers are classified on your taxes. Employees and freelancers are considered differently, so when working on preparing your small business’s taxes, think about the types of workers that you’re hiring.
8. Hit the books – Read up on available tax reductions, and specific details pertinent to filing taxes for a small business. The more you know, the better prepared you’ll be when starting your small business’s tax planning!
9. Pay attention to details – Don’t be careless while filling your taxes, you’ll regret it later! As much as you probably can’t wait to get it over with, if you start early, and focus on each expense your business has, you’ll be less stressed out when it comes time to file. Also, make sure you’re saving all important paperwork throughout the year; you won’t want to be scrambling to try to find necessary documents during tax season. If you’re paying attention to these details, you’ll be able to avoid audits.
Tax season doesn’t have to be hectic. Stay organized and educate yourself on how to appropriately tackle small business tax planning throughout the year. With these small business tax tips, you’ll form good habits, and be ready to go when next April rolls around!
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