Tax Time Tips for Small Business Owners

Tax Time Tips for Small Business Owners

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.

10 Helpful Tips for Tax Season

Every business owner knows that tax season is a very important part of the year. Tax filings are required by state and federal governments, and can play a very important role in planning the financial future of your company. As tax season gets closer, there are some things that business owners need to keep in mind that will help make filing taxes easier.

Keep Personal And Business Finances Separate

The payments you accept for your business should be put in a separate ledger than the payments you make on your personal bills. Always keep your personal and business finances separate to make it easier to file the correct information at tax time.

Keep Good Records

If you accept credit cards, then be sure that you have a service that allows you to create custom reports. Your merchant account will become a source of information for your income and sales tax filings, so be sure to keep good records of all transactions.

Keep Expense Receipts

A good business owner keeps receipts for every expense that he incurs. This includes creating a log for business travel so he can write off the miles. It is imperative that you keep your business expense receipts to offset your taxable income.

Review Your Records Thoroughly

It is common for entrepreneurs to simply turn over their records to their tax accountant at the end of the year and wait for the filing. But your tax filings are only as accurate as the records you give your accountant. Always check your tax records before submitting them to your accountant.

A Place For Everything

If you have tax records saved on your computer, then put them into a file that organizes them by year to keep them straight. Be sure to create a filing system that allows you to keep your paper records organized as well.

Have A Good Accountant

A reputable and experienced tax accountant can make filing taxes much easier.

Submit Information On Time

Make sure that you get your tax information to your accountant well ahead of the filing date to allow your accountant time to complete your taxes.

Make Information Clear

If you have any handwritten tax information, then make sure it is legible. It is always best to convert all of your tax data to digital format so it can be shared and read by easily by others.

Be Comprehensive

All tax information that is submitted to an accountant should be complete and comprehensive.

Be Available For Questions

When tax season arrives, a business owner should always be available to his tax accountant to answer any and all questions.

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