Preparing taxes for small business can be a real challenge for owners. Between day-to-day operations to marketing your product, finding time to do yearly small business tax preparation isn’t easy. Here are 5 tips to assist you in being better prepared.
- Get organized.
- Begin making estimated quarterly tax payments. If not, you may be subject to penalties.
- Separate your personal from your business bank accounts. This same principle applies to home offices, which must be a separate space used solely for business.
- Start a savings account specifically for taxes. Put money aside now so you'll have it when you need it.
- Digitize receipts. Some apps import them directly into your spreadsheet.
- Keep detailed notes. Log all travel, car and other expenses as they occur.
- Extra tip: Set up a health savings account. Enables you and your employees to put money away pretax for health care expenses. You can even coordinate prescription purchases with pharmacies to save even more on taxes.
- Electronic statements. Downloading your transactions and reconciling regularly is a great way to consolidate your process, eliminate paper and keep finances — and tax prep — up to date.
- Benefits of accounting software.
- Cut down on data entry.
- Checking accounts and financial records can be linked to tax software.
- Save time and effort.
Tax time may not be the right time to do it yourself. Hiring an expert or advisor may even save you money in the long run. Plus, consider this: tax preparation fees are tax-deductible.
- Hire a professional.
- Certified public accountant (CPA)
- Enrolled agent
- Talk with your banker.
Top 4 tax-related questions small business owners could ask their accountants:
- What should I be aware of when hiring an independent contractor as opposed to an employee?
- Should I make quarterly tax payments or pay all at once at the end of the year?
- When are my federal and state taxes due? Remember: If you do business in different states, you might have to file in each state.
- Are there any special deductions I can claim if I make any big equipment purchases?
- Keep up with industry news. Follow your small business community and tweeters like financial personalities and affinity groups that publish trends, articles, info and more.
- Learn from companies like yours. The U.S. Small Business Administration website at sba.gov layer is another great online source of tax information.
- Go directly to the source. Visit the Internal Revenue Service website at irs.gov layer for webinars, videos and more in its small business tax center.
For more helpful tax-related content, please read more on the Bank of America Small Business Community