The tax season is perhaps one of the most daunting times of the year all manner of businesses. Some of the most common mistakes that small business owners make in this regard is to wait for the 11th hour to prepare their tax reports and fill the necessary tax forms.
To stay one step ahead and to avoid being blindsided by default tax payments and penalties, there is nothing more important for you than to regularly keep track of your tax records with your accountant. If you don’t have one, hire a tax professional. Although you can benefit from services of tax professionals, there is no reason to stay in the dark about what you can do to make things more streamlined and efficient. In light of this, mentioned below are some powerful tax for small business you should not hesitate to implement:
To prepare a tax return, you don’t have to be a professional taxpayer. Employ the use of tax software program that will make you reach your target step by step. It will ask questions about what took place over the last 12 months and based on your response, it will determine what tax credits and deductions you qualify for. Using a software program will also benefit you with free online or telephone support for assistance while working in the program on taxes. If the calculations are inaccurate, they pay the penalties for you.
The main reason why people hate the tax season is because they are not prepared. Just implement a few things into your daily routine to become organized. Set up a filing system and keep all the paperwork in one place. Label each folder with one of the 12 months and fill all the expenses during that month into the respective folder. This way the work load will be divided and you won’t have to do all the paperwork at a time. This will help you to speed up the work.
Keeping Business and Personal Finances Separate
Another mistake small business owners make is commingling personal and business funds. It is better to have separate credit cards and bank accounts for your business. This will make things easier when organizing and managing things at the time of tax payment. In case your business is audited, make sure you can submit documents that support your business expenses, as this is a legal obligation.
There are times when you take your client out to lunch or ordering pizza for the office staff as a special treat. You can deduct 50% of the meals that are considered business-related. Make sure they are not lavish and treat business finances as if they are your personal funds. This also does not mean that you play a round of golf at the club just because you can write off half of the cost. It is ok to take a deduction if you won’t hesitate even if these were your personal funds. Benefiting from these is good but keep ethics in mind says Thomas from CSB Group.
It is important for small businesses to make use of all these tips in an ethical way to keep the cash flows of the business running. This will help your business to reach new heights.