After all, we are small business accountants. We talk about taxes all day, basically every day!
But seriously, if you’re a small business owner, it’s never too early to start planning your upcoming tax returns.
Follow these five steps to keep your paperwork organized, maximize your deductions, and avoid the spring tax crisis.
Make sure your business is properly classified
If you own a business, it can be classified in many ways in the eyes of the IRS. Before the year ends, make sure you’re using the taxonomy that best serves your revenue. For example, if you are a sole proprietor or a sole proprietor with no employees and over a certain amount, you can save significantly on self-employment taxes by choosing S Corp status instead. This is just one example of many that may apply depending on the nature of your business and your financial situation.
Do some research to find out which classification is right for you. If you are unsure, we highly recommend scheduling one of our free tax planning sessions to discuss your options.
Collect contractor information
If you work with a freelancer or subcontractor to help run your business, you must submit a 1099 to anyone who paid you $600 or more. You won’t be preparing the forms yourself until the end of the year, but collecting the information now will save you a lot of time. Is required.
Keep a sequential list of questions
Can I write off a donation I forgot I made last year? Are my doctor visits tax deductible? It’s a question that comes to mind from time to time, and keeping a running list of them can help prevent anxiety attacks when it comes time to pay your taxes. Accountants can be very busy from February to April. Asking these tax questions ahead of time can help ensure that your communication doesn’t get rushed and that you don’t forget the important things six months later.
Compile receipts electronically
Do you still store your receipts in a decrepit old paper folder (or lose them altogether in the abyss of your wallet)? Stop the madness! These days, there are many free apps that make it easy to store and track receipts.
I like the aptly titled receipt. This makes it easy to photograph and upload receipts and sort them based on the most common business purchases. Bonus:
If you use the Evernote note-taking app, your receipts sync with your account to keep all your information safe.
Consider future bills
You should use an account that is aware of upcoming tax laws that may affect your business. For example, tax breaks in effect this year may expire next year, so you need to maximize business impact accordingly.
We also recommend that you consult an accountant if you are considering a large purchase such as: B. Equipment or new inventory. In some cases, you will benefit from getting the big ticket items by the end of the year.
Having a tax question? Looking to secure your business positioning and maximize your savings? Schedule a free one-on-one tax planning session with a small business tax preparation services expert today!
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