Tax season is almost upon us, and as a small business owner taxes can be totally intimidating. I know because they scare the crap out of me on a yearly basis. For me, it’s a combination of paying a power bill and being called to the principal’s office. It helps to be prepared, and while I am no tax expert, here’s are some small-business tax filing tips that I do to get ready.
It should surprise no one that being prepared makes things A LOT easier. Seriously, so much easier. When it comes to taxes, it helps to plan ahead as much as possible. This means staying on top of your paperwork, keeping expense receipts and knowing what you have in your bank account at all times.
For me it helps to set aside specific time to make sure my money is in order. I try to set aside time weekly, though honestly I probably more accurately do this on a monthly basis, where I can look over my books and organize my paperwork.
Organize Your Paperwork
Speaking of paperwork, it needs to stay organized. One of the most important small-business tax filing tips I was given as a new entrepreneur is to make sure that I stay on top of my paperwork and keep it organized. It’s not always that easy, but there are ways you can make it easier.
My favorite way to stay on top of my stuff is to find a good accounting program. Now, I’ve checked out a ton of accounting programs and sadly none of them are perfect. But it’s important to find one that works for you and your business, so do your research!
Set Aside Money During the Year
This is really a “for next year” tip, but you really need to set money aside during the year to cover your taxes. Paying all of your taxes once they’re prepared can be a big expense depending on how much you owe, so having money put away in advance can really help in the long run.
I, personally, do this simply with a separate online-only bank account. Every month I put money into it. That way, when April comes around and it’s time to pay up, I’m prepared.
Know Your Deductions
What you can deduct (and, more importantly, what you can’t) varies depending on your jurisdiction. Make sure that you know what qualifies and what does not, that way you can maximize your tax credits and you aren’t surprised when you get the information back.
For example, if you work from home chances are you can write off some of your space but not all of it. If you use your internet for work and personal, the same applies. But you could be missing out on things like transportation or your phone bill. So, make sure you know what you can write off.
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