Most small business owners tend to handle the bookkeeping and filing of taxes for their enterprise by themselves. And this can cause a huge setback to the business operation. Since you cannot depend on the IRS to be merciful when it comes to tax regulations, especially on business – big or small, you should take it upon yourself to ensure that you observe these tax laws in your area.
You might find some of these tips redundant, but it is important to reiterate them to ensure that you do not breach any laws. In the end, it’s all about what can provide added efficiency to your business.
1. Exploit tax deductions on your business expenses. The expenses of your business are not just attributed to rental fees or business equipment. You can also get deductions from your personal income tax in case of business losses. Also, you should take advantage of tax deductions from your transportation costs for business trips.
2. Charity pays. Did you know that you can also avail of tax deductions when you donate to charitable institutions? That’s right. Here is an added incentive to taking your business’ social responsibility to the next level.
3. Always file taxes on time. There are different deadlines set for various kinds of companies and so you need to be on top of these deadline schedules to avoid delay. A tax accountant in Oakville Ontario Canada can help you monitor these schedules and organize your tax records to ensure you can avoid penalties when you fail to meet deadlines.
4. Perform quarterly or annual review of your accounting. This is a critical accounting practice that any sized businesses should address as it helps to ensure updated information on your accounting department. This also provides you with the opportunity to assess if the current system in place is suitable for your tax accounting needs or if you need to make appropriate changes.
1. Not keeping receipts for minor business expenses. Although the IRS won’t require you to present receipts for meals or other minor expenses for your business, you should refrain from throwing them away. This is important for documenting your tax report, as well as for your business inventory so you know where your business income is going.
2. Failure to capitalize on tax deductions. Some businesses purchase equipment or supplies in a huge lump. Even if you can afford to do so, you might want to be extra careful because they are considered depreciating capital expenditures. Buying supplies such as furnishings or computers require you to report and classify the purchase properly. If you fail to do that, you might not be able to claim the deduction you deserve.
3. Refusing to work with tax professionals. Some small business owners opt out of hiring tax professionals in order to save. But doing so can be fatal, especially when you have limited knowledge on tax accounting.
Keeping note of the above small business tax recommendations will help you stay focused and (hopefully) save income down the road. If you apply them, whether doing your own tax accounting or letting a tax professional handle it, you’d be on your way to meeting your financial goals.