Put Small Business Taxes on Autopilot
The small business owner has a lot more to deal with than small business taxes. They are dealing with marketing, management, billing, collections, customers, employees, operations, expense management, and more. Generating profits is exciting, while figuring taxes is a downer. The key to better business tax mental health is to put your small business taxes on autopilot.
There are two costs of doing a lot of your own business tax management and filing. One is the cost of your time to do it. The other is lost opportunity cost when you are dealing with taxes instead of generating business and running the show. There will be a cost to automate your small business taxes, but it could save you a ton of money over time that you would have given the government. Automation in this discussion is not about computers or machinery. It is about hiring the right talent to make the process automated from your time perspective.
Create a well-oiled small business tax machine with these components:
- Bookkeeping – This should be a business or person with the expertise and tax knowledge to properly structure your accounting with proper categorization of income and expenses. The IRS computers compare your business expense and income category totals on your returns with those on returns of other businesses like yours. When an expense, for example, is reported with a total that is flagged as out of the norm for your business type, the IRS takes notice; something you do not want.
- Tax Planning – As a business grows, there are decisions related to tax reporting as well as expansion expenses. This includes decisions about major purchases of facilities or equipment. A qualified tax professional can advise you on decisions like:
- Should you, in this tax year, accelerate or defer income or expenses to pay a lower tax bill?
- Should you lease or buy a major equipment item or vehicle?
- If you are purchasing a major item of equipment, which type of depreciation should you use?
- If you are considering hiring, should you use independent contractor freelancers or hire employees?
- Should you consider a qualified retirement plan for owners or employees? If so, which type would be the most advantageous tax wise?
- Audit Response and Representation – A good tax or accounting professional is worth the expense. First, they oversee the previous two functions to make sure they operate within the IRS rules to lessen the chance of an audit. Should the IRS decide to hassle you, the appropriately licensed tax professional can represent your interests and answer their questions.
The autopilot reference is about building a team or working with a single company to provide the services above. The benefits to you and your business include:
- Leaves you free to serve your customers, manage, and grow your business. Your time is most valuable doing what you are best at doing in your business.
- Keeps you out of trouble with the IRS.
- Done well, these services save you more than the services cost over the long haul.
Small business taxes on autopilot will help you to succeed in business.