As the tax season is upon us, it is wise to be well-prepared instead of scrambling at the last minute, with sweaty palms and fingers crossed, hoping everything “goes through” okay. If you need any help applying these tips, our organized, highly-trained staff is here to keep your business records on track to keep this process more stream-lined for you.
1. Maintain complete correct records. You may hear this from tax professionals all year long, but proper record-keeping year-round is the first step to ensure that your taxes are filed accurately. It also helps to ensure that you have all the necessary paperwork and receipts to back-up your deduction claims in case you are audited. Use an accounting or software program that can help you centralize and track your income and expenditures so that your expenses are easy to deduct when the time comes.
2. Understand deductions. As a small business, what deductions can you take? You should not only know what your options are, but you should also have documentation and receipts to back them up. Tax credits and deductions change year by year, so we will not list them all here, but you should be able to write off business operating expenses, large expenses, and even personal expenses. Both your CPA and your current tax software can help guide you through these deductions by asking you questions. (This is why tip 1 is so important.)
3. Determine who is best-qualified to prepare your taxes. Many businesses hire a CPA, but it is common for sole proprietors, home-based business owners, or freelancers to prepare taxes themselves using a software program. Be aware, however, that not all software programs accommodate business tax filers, particularly those who need to file Schedule C. Before you purchase or sign up for a service, make sure it supports common business forms; some of these include Turbo Tax, H&R Block, and TaxAct. If you decide to entrust this job with a CPA, make sure you research his or her credentials, and find out how they have been reviewed by previous customers.
If you know of a tip, blog, or article that may help fellow business men and business women be more prepared to file their taxes this year, please leave them in the comments below. If we can help you maintain your records, please give us a call.