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.
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. Certainly, deductions are a major aspect of preparing your taxes.
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 help with taxes 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. 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. 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, 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 won’t need much help anymore.
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