One financial requirement that all small business owners share is the requirement to fill out their federal tax forms and have them submitted by April every calendar year. Since the tax code is very complex and always changing, this can be a difficult process for many business owners. Those that are getting ready to prepare their taxes should follow a variety of tips, which will make it easier to accurately prepare their taxes.
The first tip that all business owners should follow is to get organized before they start the tax preparation process. A business owner should organize all of their revenue journals, records of their expenses, and other documents that will be needed to determine what their final net income was. These documents will include bank statements and credit card processing statements, if merchant accounts were used during the year. The merchant accounts statements from credit card processing service providers should be provided to the business within a month of the end of the prior calendar year.
Another tip that all business owners should follow is that they should research the current tax code and recent changes. The tax code is very complex and is always changing. For small businesses, there are a wide range of tax deductions and credits that could be used to save a considerable amount of money off of their tax liability. It would be a good idea for a business owner to spend a little bit of time reading up on the recent changes to the tax code to ensure that they are fully aware of all of the deductions and credits that they may be able to take advantage of.
The third tip to follow is to hire an accountant to review their tax returns. Hiring an accountant to prepare the taxes could cost thousands of dollars, depending on how complex and time consuming it is. While preparation can be very complicated, having a review completed can be much cheaper. For a pretty small price, the accountant will be able to review your tax forms to ensure that they were prepared correctly and that you are taking advantage of all the deductions and credits that are available to you. The accountant can also help to identify audit red flags and help to alter your tax forms to prevent being audited by the IRS.