A small business owner cannot afford to file their taxes late, as tax penalties for doing so could hit 5 percent a month. Small business owners need to make sure they file their taxes on time each year by staying organized and getting the tax documents together way ahead of time. What are some time and money saving tips that small business owners need to keep in mind to ensure their business taxes are not as painful?
Small business owners should be well-organized all year long, saving them time and alleviating the stress. A separate file should be developed for taxes, keeping the income and expenses in a ledger or computer and ensure they're correct.
Maintain Good Profit and Expense Records
It's imperative small business owners keep accurate daily or weekly records to avoid being overwhelmed at the end of the year. All kinds of software can help streamline the process including Quickbooks. They can connect payroll and bank statements and more.
Spend Time Once A Week To Track Taxes
Small business owners are constantly running around, finding ways to ensure the business stays open and does well. What they forget is that the Internal Revenue Service will go after small business owners first to ensure they are paying the right amount of taxes. Owners are encouraged to spend one hour each week to track expenses and do a checks and balances of the company.
Use A Better Service Than Excel
Small business owners need to stop using Excel to keep track of how the business is doing. Instead, they need to spend a little money each month for a better accounting platform, but it will allow owners to spend time where they need to instead on where they have to, especially at tax time.
Taxes Should Be Included In Financial Planning
All business owners – be the company small or big – need to include taxes in their financial planning. It should begin in the spring of the current year, while the summer is ensuring records are current. By year's end, owners are advised to meet with planners to review the tax reduction strategies. By the next year, owners know what to do because the legwork is already done.
Use Specific Tools
Small business owners can streamline the yearly tax filings by addressing them throughout the year. Instead of asking the accountant for documents, have a maintained electronic file system that can be reviewed. Small business owners can use any cheap or free tool that will organize the records and auto-code the transactions.
Get Help From Experienced People
Small business owners don't like the idea of relinquishing control, and they tend to think they know everything about the business. Tax time comes around though, and it's better to let the experts handle the business to pay the least amount to the Internal Revenue Service. With changes and new tax laws in place, a CPA could be a small business owner's best friend at the end of the day.
Small business owners are encouraged to stay ready and ahead of the tax man by taking in weekly assessments of their income and expenses. They should use any kind of accounting software like QuickBooks to help them maintain accurate records, so tax time isn't riffed with stress and anxiety. And, if worse comes to worse, hiring a professional to assist them isn't always a bad thing.
Sign up for our newsletter to receive industry news and updates!
Providing technology news, insights and tips for small to medium businesses.