Seasonal Spotlight on Small Business Tax Prep
Whether you’re a seasoned veteran or novice entrepreneur, it’s always helpful to refresh your small business tax knowledge before filing for the year. We’ve compiled a comprehensive list so you can spend your time conducting business instead of researching tax laws and documentation requirements. Take note of these tips to make your small business tax prep as seamless as possible.
Now is the time to dig out your business records, from every coffee receipt to client invoice. Beyond your basics expenses, ensure you have appropriate documentation for the following items:
- W-2, or another form representing your income
- Real estate property papers
- Significant medical bills
- Investment and IRA statements
- Charitable donation acknowledgments
If you realize you’re missing expenses from a business trip or large investment, go online and you can get a record of the transaction through your bank or the vendor. This exercise should illuminate where you’re missing information and give you the opportunity to gather your business papers before April 15.
Once you have everything in hand, create a tax folder to house these documents. When it comes time to file your taxes, you’ll be pleased that everything is in one central location and you can easily tally up expenses by category, and complete your forms.
Know your tax deductions
You may feel comfortable knowing what you need to declare in terms of income and business expenses, however, tax deductions are an entirely different thing. Understanding what your small business is legally allowed to deduct is important as it can save you thousands of dollars. Cross check your annual expenses with the itemized list below to guarantee you don’t leave valuable money on the table during tax season:
- Startup costs
- Your business mileage
- Utilities and cell services
- Magazine subscriptions
- Marketing expenses like business cards or a website
- Business debt interest
- Co-working space bills
- Payment processing fees
- Retirement contributions
- Clients who don’t pay
- Hiring a veteran
While a few of these items are intuitive, there was a handful that surprised even us! For a further itemized list of deductions, review this tax return preparation and tax deduction checklist. Maximize your tax return potential by claiming all pertinent deductions.
Whether you’re filing taxes on your own or working with an accountant, there are resources available to help you navigate small business taxes. For convenience, AskaCPA and IRS2Go are two apps that have ample tax code and advice at the ready. This means you can work on your taxes from anywhere and never be without reliable tax resources.
If an accountant is out of the budget, use online tax providers, such as eFile, H&R Block, TaxACT, and TurboTax. Each service will take you through the required steps for completing your taxes. Their reasonable fees are worth the investment if you’re unsure about how to prepare business taxes.
Best Practice: Avoid mixing personal and business expenses
For small business owners, it’s easy to charge business expenses to your personal card and vice versa as the funds may be coming from the same place. Yet, for tax purposes, it’s best to keep your personal and business expenses as separate as possible. Go to the full article.