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When starting out in a new small business, it can feel easy to get overwhelmed by all the minute (yet influential) tax details there are to know. Here’s a simple guide to help you prepare for tax season and make it easier on yourself to file your small business taxes next year.
Keep Everything (And Keep It Organized!)
The number one way to ensure that taxes go as smoothly as possible is to keep all pertinent financial documents. Just as important, though, is an efficient organization process. Either sort your receipts by type, by date or by category – whatever works for you. Just implement your organization system quickly to prevent taxes from becoming a nightmare next year.
Know Your Deductions
One secret to successful small business taxes is knowing exactly what you do not have to pay. By taking advantage of all your eligible deductions, you can save your business money and do your taxes up right next year. Some of the write-offs you can qualify for in your small business include:
Inventory
Mileage
Cost of startup
Software and hardware
Company-related travel expenses
Separate Out Your Expenses
Keep your business expenses separate from your personal expenses. It may be tempting to lump it all together, but know that it will not simplify your taxes at all – in fact, quite the opposite. You can help this process by keeping separate accounts for your different spending needs; this will make taxes much easier to file at the end of the year.
Know Employee Withholdings
If you don’t have all the information you need from your employees, it can be a hassle to try to get it just before taxes are due. There are several categories you’ll need to withhold funds from for your employees, including Social Security, an unemployment period or Medicare. Have your employees turn in relevant information on these topics so you don’t have to chase them down for it later on in the year.
In short, by keeping organized and up to speed on what’s required of you during tax season, you can ease your stress load significantly in the upcoming year. Act proactively and know your deductions, but also, don’t be afraid to hire outside help if you need it. Sometimes, due to a complicated tax year or simply a lack of time in research for tax preparation, a financial advisor is exactly what a company needs to help them get through your small business taxes.
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