Many small businesses need help with taxes. In each state in the United States of America, there are several tax rules and regulations to follow. For example, you should be well aware of the deadline for 1099 mailings. If you are a regular business owner, not a certified public accountant, then completing your taxes could result in a lot of frustration. Luckily, we have put together some helpful tips that will make preparing taxes much easier next year.
Prepare taxes on a quarterly basis. Do not wait til the last minute to start preparing to file business taxes. The longer you wait, the less time you will have to thoroughly delve into your business finances. This gives you more time gather receipts for business expenses. It also gives you more time research tax deductions for business. That way, you can capitalize on those business deductions and tax-write offs that will save your business money. When it comes to preparing business taxes, you can never be too early or too prepared. Do not wait to start your tax preparation efforts.
Concentrate On Deductions
If you want some business help with taxes, concentrate on deductions. Federal tax laws allow small business owners to deduct all their business expenses from revenues. Under this tax law, small business owners can get deductions on business travel, equipment, salaries or rent. Naturally, these deductions reduce the total taxable income, resulting in lower tax bills. Moreover, business owners can deduct business losses from their personal income to further lower tax bill. In case your business losses exceed personal income, you can deduct some of the business losses from taxable income of future years. There are also cell phone deductions that businesses can capitalize on as well. Certainly, deductions are a major aspect of preparing your taxes.
Important Tax Deductions
Some of the most important tax deductions to take advantage of are ones that you may not even know are available to you. Here are some of the top business tax deductions to make sure you factor into your year-end returns.
- Home office deduction
- Self-employment deduction
- Internet and phone expense deductions
- Health insurance premiums deduction
- Business meals, entertainment and travel deductions
- Retirement plan deduction
- Education deduction
Make sure that you pay close attention to the above business expense categories to see if you qualify for any of the above deductions. Who knew your office interiors could earn you a deduction? Reporting these deductions can have a huge impact on your business taxes at the end of the year.
Maintain Financial Records
Next, maintaining ongoing financial records helps with taxes. By documenting expenditures, you can claim deductions easily. Secondly, documenting all your income allows for easy reporting. In addition to helping with taxes, careful financial reporting gives you insights to the business. On the whole, sound bookkeeping will help your business be tax compliant and fiscally responsible.
Keep Up With Nexus Regulations
If your company does business in multiple states, you may need more help with taxes than your Xero accounting software can provide, depending on your nexus. To file your business taxes properly, nexus must be kept up to date with the latest state regulations. For example, if you have an office space in New Jersey, then you might have to pay a different percentage of taxes to the state if their nexus regulation changes. Of course, staying on top of your company’s nexus creates a smooth tax filing at the state levels.
Choose Appropriate Accounting Method
The accounting method you choose can make a big difference in your tax reporting. This tip is to choose your accounting method carefully. Small business owners can choose either cash or accrual method of accounting. According to experienced small business owners, cash accounting method is relatively easier. In the cash accounting method, only the cash your business receives is accounted. But, in accrual accounting method the total income is reported based on receipts. As a result, the taxable income could be different between the two methods. However, the accounting method you choose will not effect the comptroller tax in any way. To help with taxes, the accounting method should be chosen strategically.
Calculate Employee Taxes
To receive further help with taxes, you should withhold federal income taxes from your employees’ wages. The amount of federal taxes withheld should be paid directly to the IRS. Under the federal tax laws, every small business with employees must withhold social security or FICA, medicare, federal and state income taxes from their salaries. Plus, small businesses have to pay federal and state unemployment taxes. Just be sure to keep the 1099 deadline in mind if you do have to deal with employee taxes. Undoubtedly, calculating employee taxes help small businesses stay prepared to file taxes according to employment regulations.
Take Advantage Of Tax Concessions
Small businesses, which earn less than $2 million in annual revenue, are eligible for business tax concessions. Taking advantage of tax concessions can help with business taxes, reducing the final tax amount due. There are several federal, state and local tax credits you can apply for. Surely, taking advantage of tax concessions can be financially rewarding for the business and yourself.
These tips will help with taxes for almost any business. If you are filing taxes on your own, instead of using Liberty Tax Service or a similar provider, careful consideration of each point is important. In case you are unclear about a tax filing rule or regulation, some additional research or consultation might be required. Remember, these tips can only help with taxes if they are used properly. Once you have a working knowledge of these tips, you will not need much help anymore.
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