If you're a small business owner, every dollar counts, and tax preparation is no exception. The good news is that there are many ways for small business owners to maximize credits and deductions, and to find help and resources for preparation. Here are our top five tips for a stress-free tax season.
#1 Plan Ahead:
As a small-business owner, you will likely have to pay taxes throughout the year. Make sure you're aware of your obligations and due dates, and that you have an estimate of what you'll need to pay. Start setting aside funds regularly, so that you don't get blindsided by these more frequent tax expenses.
#2 Track Spending:
Keeping close tabs on what you spend is the key to maximizing your tax savings later on. Whether you use a fancy budget-tracking program or just plain old pencil and paper, don't skip this important step. Most experts also suggest keeping your receipts throughout the year, so you have accurate information as well as proof of your spending.
#3 Take Advantage of Deductions:
As a small business owner, it's likely that you struggle to maintain a boundary between life and work. You might run your business out of your home. When money is tight, especially in the beginning, you willingly forgo a salary and use money from your personal account to keep your business afloat. One way to balance things out is to have a good understanding of tax deductions, and use them to your advantage. Keep track of anything you use or do in the service of your business. You can take deductions for mileage, meals with clients, equipment and supplies, and rent, among many other things.
#4 Find Credits:
If your business operates in a way that benefits others, you may be eligible for certain tax credits. For example, if you use an energy efficient vehicle, provide childcare for your employees, or hire from certain groups, there might be a tax credit that applies to you. There are other tax credits that apply to a wide variety of situations. Check the IRS website for a complete list
#5 Get Expert Help:
Doing your own taxes will save you money, right? Not necessarily. A good accountant can help you find the best savings and deductions for your situation, and may very likely end up saving you money in the long run. So if you feel overwhelmed or just not quite up to the task, consider hiring someone to help you with your taxes.
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