Thoroughly unenjoyable to most business owners, tax filing is an inevitable consequence of running a small business, but if you know how to maximize your deductions – or employ somebody who does – you could help your business enjoy its biggest refunds yet.
Below are 5 tips for getting the most out of your small business taxes:
- Use tax filing software – or outsource to an accountancy firm who use it
Most modern business owners already make use of tax filing software, or employ an accountant or accounting agency who do, but if you’re still scribbling things down with a pen in an old notebook, it’s definitely worth getting with the times! There are a variety of software’s available – TurboTax and TaxAct are just two – and they help you save your work and make swift adjustments as and when needed.
- Be clear on the tax code in your state
While the federal tax code is the same for all small businesses, within states, tax laws can vary significantly, and not knowing about applicable deductions in your state could see you paying more in taxes. By consulting with a tax professional or hiring a certified accountant, however, you need not miss out on valuable refunds.
- Hold on to your receipts
As you will doubtless already know, business expenses get written off differently to your personal ones, and in many instances, you’re able to declare items you’ve purchased for your office, as business expenses. You may even be able to get a refund for office space if you work from home; a tax professional will advise you on this.
- Have your business registered properly
Tax laws treat different business structures in very different ways, and whether yours is an S-Corp, LLC, LLP, trust or something else, you may be in a good position in tax terms, or you may benefit from adjusting the structure to get a better outcome when it comes to tax season. As with any tax related issues, a professional tax or accounting advisor will be able to guide you.
- Account for all carryovers
Your small business may be continually creating new expenses and receiving funds, making it somewhat confusing as to what belongs where, and what should be carried over from accounts opened a year ago, for example. The best way to avoid any confusion and not miss out on potential deductions, is to create a special file for your carryovers, and be sure to account for them all. If you have an in-house accountant, or work with a remote accounting team, you can have them do this important task for you.
As technology advances and more and more accounting agencies offer their valuable services remotely, getting your taxes right need not be a big deal. In fact, with so many experts on hand and software to help even the most reluctant of business owners, there’s no reason why the tax man can’t become your friend, instead of your foe!