3 Tips for How to File Small Business Taxes
If you searched on “how to file small business taxes,” You could be about to save time, money, and aggravation. If you already own and operate a small business, there is no need to tell you that its success requires your attention, hard work, and usually long hours. You know your business best, and it is served best when you are managing, marketing, and working with customers. Unfortunately, there is that tax thing, and it can be a real drag. Taking the do-it-yourself approach, you may be saving money, but more likely you are not because:
- Your time in keeping up with taxes and doing the filing is taking you away from your business.
- You could be giving the government more than you should be, because you may be missing tax minimization opportunities.
With those two things in mind, here are the Tax Hive tips for how to file small business taxes:
- Work with accounting and tax professionals – A CPA, Certified Public Accountant, is a lot like you are in your business. They are experts at what they do, keep up with the latest trends (IRS rules) related to their business, and constantly monitor tax law. Their purpose for being in business is to serve their customers/clients, that would include you, with advice and planning to help them maximize profitability while minimizing taxes.
As your business grows there will be decisions that can benefit greatly from the advice of a tax professional, including:
- As you grow, there are tax consequences in hiring employees, and the advice from a CPA could help you in whether to hire or use self-employed independent contractors.
- If you are considering buying business real estate, major equipment, or vehicles for business use, there are choices as to how to depreciate them or possibly taking special accelerated deductions for their cost. The tax you owe can vary greatly based on your decisions.
- Tax professionals can help you as your business grows to implement retirement plans for you and your employees. IRS qualified plans can give you super tax deductibility for business contributions while allowing the assets to grow in the accounts tax free.
- Working with a firm that also prepares and files your return will assure that everyone is working together. The old saying “garbage in-garbage out” applies to taxes as well. With the preparers and the decision advisors all working on the same plan, the output is going to help you to avoid IRS problems and to save money as well.
- There are triggers that the IRS computers catch that can result in an audit. From math errors to expense categories with amounts higher than others in your type of business, computers can flag you for questions. Your tax professionals can alert you before you file a return that you have items that could be flagged.
- No matter how well the work goes, sometimes the IRS must justify their existence by questioning items on returns. When your tax advisors are aggressively, though legally, doing your taxes, there can be a question now and then from the IRS. A CPA certified to represent you in front of the IRS can quickly answer their questions.
- Provide accurate and timely data – For your professional tax help to be as effective as possible at saving you money, you should make sure that all information about income, expenses, and major purchases reaches them in a timely manner. Sometimes a decision in the current tax year can save you money at filing time. Be sure that you are keeping a record, receipt, or digital record of all business related income and expenses.
- Run your business, increase your profits, and enjoy – Now that you have a well-oiled machine handling your taxes, you can just sit back and enjoy.
Better yet, the time and frustration you are saving in having professionals on your team can be used to grow your business and profits.