Whether you’ve opted for the more economical choice of outsourcing your bookkeeping and accounting, or have an in-house professional to handle it for you, getting to grips with your business taxes is one of the quickest and easiest ways to increase your income, minimize your tax liability and avoid costly and reputation-damaging legal issues.
Here are 7 great ways to help your small business save money:
- Hold on to tax and financial documents for a minimum of 7 years
While it might seem a little unnecessary, you’ll be thankful you did this when it comes to making a claim or undergoing an IRS audit.
- Be aware of all deadlines
Fortunately, if you’ve got an experienced bookkeeper and accountant on your team, you won’t have to worry about these too much, but it is important to remember that taxes aren’t just about the 15th of April.
- Keep records relating to loans
While the IRS doesn’t typically classify business loans as income, the interest that you pay on them is usually classed as a deductible expense, so hold on to your loan paperwork.
- Understand the different audit types
Below are the following 4 main audit types:
- Office audit – these are relatively simple and the business owner will be asked to report to the local IRS office to resolve a discrepancy
- Correspondence audit – you’ll be asked by the IRS to send them a particular document(s) by mail or fax
- Field audit – thorough, these audits are typically carried out at the place of business
- Criminal investigation audit – if as a business owner, you’re suspected of having committed some form of tax evasion or fraud by the IRS, you’ll need a lawyer on your side
- Get prepared well in advance
Waiting until the last minute to prepare your tax documents is never a sensible idea, and hopefully, if you outsource your accounting requirements to a reputable firm, you’ll never have to do this. If you’re expecting a refund, being prepared can help expedite the process, and it will also give you time to find missing documents should there be any, and answer any questions the IRS might have for you.
- Seek expert, professional help
For small businesses whose finances are relatively complex, hiring the help of an expert accountant or other tax professional can be a wise investment, and many soon recoup their money in tax savings that they wouldn’t otherwise have been aware of.
- Don’t use employee payroll taxes to pay business expenses
While this is a very common practise, it’s one that is generally frowned upon by the IRS, and withheld taxes should be sent to them using EFTPS (the electronic federal tax payment system.
For more tips and strategies to help your small business save money at tax time, consult with a professional tax expert, and start making the savings you deserve, today.