We are well into tax filing season and small business owners have the added pressure of filing not just personal taxes, but business taxes as well. While we are not tax attorneys or tax specialists, we have gathered some useful tips over the years to help our small business clients better prepare for tax season and to help them with accurate filings.
1. Keep on top of important filing deadlines. Most of us know the looming April 15 “Tax Day” deadline for personal tax filings. However, you need to be aware that some business taxes and returns must be filed as early as mid-March. Talk to your accountant or tax specialist for more information on deadlines in your state and for your business.
2. Review your financial reports. Prior to submitting the information to your accountant or tax specialist, you will want to take a close look at your profit and loss statements and financial reports. Specifically, you want to review those areas of gross income that may trigger different taxes. Additionally, review your payroll taxes and make sure you or your payroll company are taking all the appropriate deductions.
3. Review your business receipts. Tracking receipts and keeping a filing system up to date is often difficult, but this is an area ripe for an audit. Look over your receipts and make sure they are properly noted to document the business expense, who you were with and what it was for, and scan the documents. A paperless receipt filing system is easier to retain and store than a file folder with hundreds of loose receipts.
4. Review elections and deductions with your accountant or tax specialist. Make sure you are properly itemizing your capital expenditures. Knowing the difference between what does and what does not qualify as a capital expense. Also, don’t forget to track all your available reimbursable expenses and to ensure that you are taking your available deductions, such as automobile deductions.
5. Give yourself plenty of time. If you have not already started preparing your business tax filings, do not put it off another day. There is a lot of work and preparation that goes into your business filings and you do not want to be left spending all day and night in the days before the filing deadline. Additionally, some tax professionals will charge a premium to prepare your business taxes in the days leading up to the filing deadlines. Preparing in advance can save you both in time and money.
6. Post-filing review. While it is nice to breathe that sigh of relief once the filings have been sent in, take some time to review what worked and what did not work in your tax preparation. Use the time to set up better filing and retention practices, to review whether your gross income is coming from the sources you thought it was (or should) be coming from. And take time to make sure that in the future, your tax preparation can be as seamless as possible.
Any U.S. federal tax advice contained in this communication (including any attachments or links) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein.
Some helpful articles: