Since you can’t get away from taxes, the best thing to do is be prepared for them. If you own a small business, taxes become a bit more complicated, but there are several ways to make sure tax time is less stressful. Here are tips 3 and 4 for small business owners.
3. Leverage Tax Preparation Tools and Expertise
Most of the personal income tax preparation software applications include business tax options as well and are typically geared for small business or self-employment. The IRS has also gone to great lengths to provide material on its website that is easy to find and understandable by non-tax professionals.
However, tax laws are complex, and it can take time to become proficient. Hiring a tax professional may be in your best interests since this person could identify tax breaks and deductions you may miss.
Whether you use software or hire a pro, keeping a checklist while you are thinking about taxes throughout the year can help you get ready for tax time. There are online and print resources that show you what records and information you need, any tax guidelines geared toward businesses, and the all-important filing and payment dates.
Some things to keep track of include:
- Filing payroll tax forms
- Sending 1099 forms to your contractors
- Assembling income and expense records
- Renewal for liability insurance
You can find tax organizers and worksheets online, or your tax professional may have one for you to use.
4. Avoid These Common Mistakes
There are a couple of mistakes small business owners tend to make that can cause trouble down the road.
- One is thinking your tax professional will assume responsibility for all your tax needs. You cannot assume everything has been done appropriately because, again, you know what they say about “assume.” No matter who prepares the taxes, you are still responsible for all the information on the return and the taxes owed.
- Another mistake is allowing fear of the IRS to keep you from taking legitimate deductions. If you work with a reputable tax professional or online tax preparation service, you should be given appropriate guidance on your eligibility for each available write-off.
There you have it. Keep taxes in mind all year, keep up with changes and news, leverage reputable tax tools and professionals, and avoid common mistakes and your tax time stress should be reduced significantly. As a bonus, you will save yourself some money, and maybe receive a refund.