4 Tax Tips for Small BusinessesFebruary 3rd, 2015 by Integrity Accounting
Small Business Taxes
From January to April, countless organizations and individuals scramble to prepare documents for tax season. For the majority of the year, most businesses focus on new products, sales, and customers. Little attention is given to accounting best practices. If you feel like you’re in this boat, don’t worry – you’re not alone.
This tax season, consider these four tips to make tax season easier for you and your business:
1) Keep Meticulous Financial Records
Precise and detailed bookkeeping is key to filing taxes accurately and efficiently. Make sure your financial reporting system is being utilized and keep track of any paperwork you plan to use for deductions.
And while it may not help you file this year’s taxes, consider conversing with an accountant about how your financial records are kept. Creating systems that makes sense for your business will make tax season a smooth ride in the future.
2) Understand Audit Traps and Takes Steps to Avoid Them
- Independent contractors and employees are different entities. If you confuse them when filing employee taxes, the IRS could view it as attempt to avoid paying taxes.
- Read the fine print when applying for a home office deduction. Not all home offices and expenses qualify for the deduction. Understand the deduction to avoid paying penalties.
- Avoid miscellaneous deductions, especially if they are large in proportion to the size of your business. File appropriate deductions to keep the IRS from asking questions.
3) Separate your Business and Work Expenses
It sounds simpler than it is. The IRS is likely to look into business expenses that look like personal expenses. Keeping separate financial accounts can help to distinguish work and play. This is especially important if you own an LLC.
4) Use an Accountant
This tip may seem a bit cheeky coming from an accounting firm, but we’re being honest. Even if you choose to work with another firm, by hiring a trained accountant, you can focus on your core constituencies while your accountant makes sure your finances are in order during tax season and beyond.
Accountants know taxable income regulations, tax incentives and deductions, and more. It’s their job. This tax season consider focusing on your business and work with Integrity Accounting to make sure your tax season flies by with ease.