Small business owners: don’t let taxes scare you
It’s a dreaded day in America. April 15, the day federal and state taxes are due, is one of the busiest days at U.S. Postal Offices around the country. Many of those offices stay open late to ensure everyone throws their taxes in the mail on time.
But paying taxes isn’t all bad, especially if you can stay on top of your finances year round. Here are some tips to make the process a little easier.
Use your resources
There are plenty of online portals out there to help you find the deductions you need to lower your tax bill, including the Tax Defense Network and the Business Tax Center. You’re a small business, but you don’t have to pretend to be a tax expert. Sites like these attempt to make your tax filing easier.
Know your deductions
This goes hand-in-hand with the first tip on the list. Businesses can deduct all ordinary business expenses, but not all of those deductions are obvious, and some are a little gray.
Business travel, equipment, and salary expenses can be red flags for the IRS, so have a responsible accountant help you through those. This tax-time infographic for small business (seen below) shows some of the items which are tax-deductible vs those that aren’t.
It’s okay to take a loss
Business owners can write any losses off against their own pay. If your losses exceed personal income for the year, some of the year’s business losses can be used to reduce your tax bill for future years.
Don’t forget sales tax
Most service-related businesses are exempt from sales tax, but the majority of products are taxable by most states. So, if you own a business that sells a product or service that is subject to sales tax (check with your local Small Business Administration office), you need to register with a state tax department. In addition to that, you need to track and include that information on the company’s sales tax return.
Have solid accounting software
Good accounting software can remove the headache from doing taxes. These days, there’s plenty of easy-to-use finance applications to choose from. Xero, for instance, is an online accounting system that allows an unlimited number of users to organize important tax information throughout the year. This way, it’s easy to get all of your ducks in the row before tax season arrives.
Don’t throw it out
Did you know your small business could be audited from taxes you filed seven years ago? That’s why you need to make sure to keep important tax information for at least that long. If you use a service like HR Block, they’ll keep that information stored securely on their servers, but you should also print everything off and keep a hard copy in a safe.
Use the IRS
The IRS has a small business website that can answer any specific questions you may have about filing taxes, especially when it comes to employee taxes and business tax deductions — two big areas that can be fairly tricky.
When it comes to doing your taxes, don’t be afraid to ask questions. Unlike most things in life, asking for forgiveness isn’t as easy as asking for permission. So, do your taxes properly at the right time, collaborate with your accountant and you won’t have to worry about it in the future.
This was posted in Bdaily's Members' News section by Thomas Kennedy .