Tax Season Do's and Don'ts for Small Businesses
It might not be as exciting as, say, the start of baseball season, but taxes are something every small business must endure. Luckily, there is a lot of great advice for making sure you avoid common pitfalls and get the most from your filings. Here are some do’s and don’ts for preparing your taxes this year. Please note: these are for educational purposes only. For tax advice unique to your business’ current situation, seek out a licensed professional.
Hopefully you’ve been tracking your expenses throughout the year. Most experts agree it’s easier to take 10-15 minutes per week to organize your business expenses than several days on deadline in April. Either way, make sure to give yourself plenty of time to round up receipts, invoices, and expenses, and keep them separated into appropriate categories. You should also be receiving information from whichever payment processor you’ve chosen to help you file.
Don’t Forget To Send Out Income Statements to Employees
You don’t want the employees you’ve relied on throughout the year to be emailing you wondering about their tax documents. For regular employees, make sure to send their W-2s as soon as possible once the new year begins. If you work with independent contractors, and have paid them over $600, things can be a little trickier. Visit the IRS’s website to learn how to best handle tax information for contractors.
Do Decide Whether or Not You’ll File Taxes Yourself
Small business owners are used to the DIY-lifestyle, so you may want to handle taxes on your own. Just make sure you’ve rounded up all the right information, including data from your payment processor, as well as the appropriate amount of time and patience needed to get through the process. If you do decide to go it alone, there are lots of great tax preparation software options that can help relieve some of the burden. If not, hiring an accountant can be a great idea, provided you find the right one. Pick someone who’s reliable and familiar with your industry.
Do Make The Most of Your Deductions
Deductions are a small business owner’s best friend during tax season. If you’ve been keeping receipts for things like gas, meals, entertainment, office utilities, software, or computer purchases, you’re already one step ahead of the game. Claiming expenses that go towards helping your business operate can help give you a leg-up when filing, but be sure to research some of the more complicated aspects of deductions, such as the use of a home office and automobile mileage expenses.
Don’t Forget You Can Always File An Extension
If the tax deadline of April 15 is just out of reach for you, consider filing an extension with the IRS. Remember though, if you owe the IRS money, you’ll still have to pay that estimated amount by April 15. An extension will give you more time— up to six months— to finish your return.
Run A Tax Day Promotion for Your Business
Why let accountants and the IRS have all the fun on April 15? Depending on the kind of business you run, you could hold a tax-day related promotion. Consider offering items for $10.40, for instance, or creating a refreshing beverage to celebrate the end of the season. Tax day promotions are a great way to connect with your customers, so give it a try.
Start Getting Ready for Next Year
It’s never too early to start getting organized for a new tax year. The sooner you start putting the pieces together, the easier the process will be for 2015. Good luck and happy filing!