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Getting Prepped For Your Small Business Taxes

November 24, 2016

If you’ve recently set up a small business, you’ll need to start preparing for your taxes right away. It’s imperative that you have a well organised bookkeeping system right from the get go, so that you can begin keeping accurate records and receipts for all deductions.

Not only does this help you to stay organised, but it will see you getting the maximum tax breaks that you’re entitled to, and will help you to prevent making costly mistakes that could see you incurring fines and penalties.

If you are new to the business world and find the thought of getting prepared for taxes a little daunting, you could consider hiring an accountant or bookkeeper. They will help you to get set up efficiently, and will take care of as many aspects of tax preparation as you require.

They will be able to advise you on how frequently you’ll need to file your taxes, such as quarterly, semi-annually or yearly, and they will also keep you updated with any changes to tax laws.

Even if you’re planning to complete your own tax returns, it can still be beneficial to talk to a qualified accountant or bookkeeper when you first set up your small business, just to help you organise things and set off on the right foot. Ask around with other small businesses in your locality to see if they can recommend a firm or individual.

Where to begin…

Requesting an Employer Identification Number from the IRS is one of the first things to do when you set up your small business, it will help you to keep detailed tax records; complete the SS-4 form and file it with the IRS. Over the course of setting up your small business, you’ll need to file several different forms, and these will vary depending on the size, structure and nature of your company. Consulting a CPA or bookkeeper will ensure that you always file the correct forms.

The next step…

Depending on the structure of your small business, you’ll need to file the appropriate form with the IRS to ensure that your taxes get processed accurately and on time. Many businesses will file their projected income figures as each year passes, then they will make the necessary adjustments in the following fiscal year. 

Keeping a tax diary

Adding sales and receipts to a diary is a great way of keeping on top of money coming in and going out. It will give you an accurate reference for receipt dates, amounts, payees, check numbers, employee accounts and all manner of other small details that could prove crucial at tax time. Try to keep the diary updated on a weekly, or at least monthly, basis.

Note down all important tax dates

There are often several important deadlines to be met when you start a small business and begin setting up your taxes, and missing these can result in costly penalties. Keeping a calendar of all dates upon which you need to file certain forms and paperwork, will help you to keep on top of deadlines and avoid incurring fines. If you have hired a CPA or bookkeeper, they will have given you certain deadlines to meet, too. 

Properly record all incomes

Calculating your predicted income taxes is made so much easier if you’ve kept a detailed and accurate record of any monies that have come in to you over time. 

Properly record all outgoings

Keeping track of all your expenses is equally as important, especially if you want to give your business the best chance of qualifying for tax breaks and deductions at tax time.

These are the basic points to consider and take action upon when setting up your small business; a CPA or bookkeeper will help fill in any gaps and give you further advice and guidance.

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