Nobody relishes the idea of doing taxes, and considering that those for your business can be a lot more (ahem) taxing than your personal filing, you might not be too keen to get started. But with a few tips, tricks, and tools under your belt you can easily come up with a strategy that will ensure your accounts are in ship-shape when it’s time to file taxes for your small business. Here are some strategies that are sure to make the process easier.
- Hire some help. While you may eventually be able to go it alone with nothing more than comprehensive tax software, you might want to see an accountant in the beginning at the very least so you can learn the ins and outs of filing as a business entity. For example, did you know that many businesses file quarterly estimated taxes, or that you may be able to write off a wide variety of business expenses? As a small business owner you might not think you have the extra cash to pay for this professional service, but considering that an accountant could save you a lot, give you pertinent advice, and take on the liability should something go wrong with the filing, it might be well worth a consultation at the very least.
- Consider quarterly estimated taxes. You might not be too keen on the idea of doing your taxes four times each year (especially since you will be virtually guessing when it comes to how much to write the check for). But believe it or not, this tactic can actually save you time and money over the course of the year, making it that much easier for you to file in April and potentially cutting down on the lump sum you would otherwise end up owing.
- Keep meticulous records. Throwing all of your receipts into a shebox (hey, they’re all in one place!) is not exactly meticulous. Consider investing in some accounting software that makes it easy for you to enter sums, scan receipts, and organize and track all of your income and expenses. Your tax preparer will thank you and it will make securing all of the deductions you’re due that much easier.
- Plan for savings. Everything you do in the course of business could come with potential savings, from the type of corporate structure you choose to the area you operate in to the way you spend your money on behalf of the business (buying versus leasing a property, for example), could affect the amount you owe on your taxes each year. Even knowing how to file a tax extension properly could make a difference. So planning out every aspect of your business with the issue of taxation in mind is an essential part of ensuring that you’ll save the most money when it comes time to pay the piper.
- Prepare for audits. Nobody wants to believe that the IRS will audit them, but it definitely happens and you want to be prepared when it does. Although your budget might not allow you to retain the services of a tax attorney, it couldn’t hurt to have a couple of good ones in mind for periodic advice (an expense you can write off, by the way) as well as in case of emergencies (like an audit). Just make sure you have all of your records and relevant documents neatly arranged so that neither your attorney nor the IRS has trouble sifting through the data.