It’s an exciting thing to own your own company. With all the dreams, technology, willpower, and talent you have, the sky is the limit to grow your company. However, that dream can be a strong halt, if you don’t adhere to filing business taxes properly and other tax regulations. So, the following includes some business tax tips.
1. Make a Tax Calendar
When it comes to business taxes, there is more than the April the 15th deadline to be concerned about. There are also quarterly estimated taxes, and there are the payroll filings and filing deadlines for corporations. Other tax requirements for filing could be for the city/state. So, with all of the plethora of deadlines for filing taxes, it’s imperative to be organized by creating a tax calendar. There are also mobile apps that are handy to remind you about your taxes. Otherwise, you can risk facing penalties for failure to file and pay on time.
2. Maintain Superb Financial Records
It’s crucial to keep track of every expense, purchase, paycheck, and other financial transactions. These records give the ability to deduct eligible transactions. Also, the IRS usually wants proof of the expenses. So, it will behoove you to maintain and organize copies of bank statements, invoices, and other relevant financial transactions that may be needed for future reference. Digitizing these records is also a good idea as a backup.
3. Understand the Future and Current Business Tax Structure
Sole proprietor and partnership file on their personal income tax returns. he sole proprietor encounters all the liabilities, and partners share the liabilities. However, when it comes to an LLC or a corporation, there are unique tax structures for credits, deductions, taxes, and losses through personal taxes.
4. Understand Basic Business Tax breaks, Credit, and Deductions
When it comes to businesses, there are tons of business tax deductions you can claim as opposed to filing a personal income tax. These deductions could include home office expenses, startup costs, vehicle expenses, travel expenses, medical expenses, entertainment, meals, and operational expenses. There are numerous business tax credits as well, including certain employees’ hiring, the purchase of eco-friendly business equipment, and more.
5. Establish a Cloud-based Bookkeeping System
Many times, small business owners don’t have time to spend on bookkeeping. Many of them don’t have the extra resources to have a bookkeeper on a full-time or even a part-time basis. Also, statistics showed that if the business owner spends an hour daily on bookkeeping for the business, then the owner will end up spending six weeks a year to handle this very important task. That time spent on handling this daunting task could cause the entrepreneur to lose out on making money.
Due to these issues, it is crucial to have a top-notch, cloud-based bookkeeping system. This system will save you money and time, and you can delete your Excel spreadsheets where you have to manually input financial data.
6. Hire a Competent Accountant
Filing tax returns is a daunting task for most small businesses. However, there could be swift penalties if the taxes are not filed properly. So, if you hire a professional CPA or accountant to manage your business tax needs, you’ll gain the power to take total advantage of all the available tax breaks. You will also have more time and freedom to focus more on growing your business without having the worry about any tax issues.
The bottom is that these tax tips are the most crucial for all small companies. Uncle Sam doesn’t play when it comes to paying your taxes. And adhering to these tips will not only prevent you from potential problems with the IRS, but you also will have more freedom and control to live out your entrepreneurial goals.