As a small business owner, tax season can be a stressful time. It’s easy to get overwhelmed by various filing requirements and paperwork. It can be challenging to know where to begin when it comes to preparing your taxes. However, there are some steps that you can take to make the process as stress-free as possible. Troy Renkemeyer covers some tips and strategies that all small business owners should consider when preparing for tax season.
Get Organized
The first step in preparing for tax season is to get organized. Start by gathering all the documents you will need for filing your taxes, such as receipts, invoices, bank statements, and other financial documents. Make sure to keep all these documents in one place so they are easy to access when needed. You should also create an an organized filing system to locate any document, if necessary, quickly. Being organized is one of the most important steps when preparing for tax season.
Keep Track Of Expenses
It’s essential to keep track of your expenses throughout the year so that you don’t miss any deductions when it comes time to file your taxes. Keep records of all business-related expenses such as travel costs, office supplies, meals and entertainment, advertising costs, and more. You should also keep track of any charitable donations or business losses that you may have incurred during the year. By keeping track of these expenses throughout the year, you’ll easily account for them on your tax return and maximize your deductions.
Understand Your Tax Obligations
The next step is understanding what type of taxes your small business needs to pay and when they need to be paid. For example, if your business sells goods, it will likely have sales tax obligations in addition to federal income tax obligations. The due dates for filing taxes will vary depending on what type of entity your small business is registered as (sole proprietorship, partnership, corporation, etc.). It’s important to know exactly what kind of taxes are due and when they are scheduled to avoid penalties for late filing or paying taxes.
Research Tax Credits
Depending on their specific situation, small businesses may be eligible for various tax credits. Researching available credits is a great way to reduce your taxable income and save money on taxes each year. Some common credits include those for hiring veterans or people with disabilities, investing in renewable energy sources, offering health insurance coverage options for employees, and more. Before filing your taxes this year, consider which credits may apply to your business.
Hire A Professional
For small business owners who are not comfortable navigating the complexities of tax law themselves or simply don’t have time due to their busy schedules, it’s best practice to hire a professional accountant or tax specialist. A professional can help businesses prepare their returns accurately while finding ways they can legally save money on their taxes each year. Working with a professional will also ensure that no mistakes are made, which could result in costly penalties or fines if errors were made on the return or its subsequent filings after submission day has passed.
Conclusion
Tax season is often a stressful time for small business owners, but by organizing documents ahead of time, keeping track of expenses throughout the year, understanding your tax obligations, researching available credits, and working with a professional accountant or tax specialist if needed—you can make filing your taxes more accessible than ever before. Troy Renkemeyer says that by taking these proactive steps now, you’ll be well-prepared come tax season.