Filing taxes is not an easy task and when the task in hand is filing for business, it becomes even more overwhelming. If you are a small business owner and always get worried when the tax deadlines are near each year, you need to stop worrying and read this piece. Here are some of the best tax tips you will get when it comes to taxes for small businesses.
Use a Payroll Software
Do you know that of all the companies in the US, one-third of them are fined each year for not correctly handling their payroll taxes? One of the most common reasons of this is handling of payroll by employees. The best thing to do in such situation is to invest in a good payroll software. This will help you manage your payroll the professional way and will help you avoid any extra fines, penalties and charges from the IRS.
Keep a Distinction between Your Personal and Business Finances
A common mistake made by small business owners is commingling their personal finances and funds with the business ones. The best thing is to have separate bank accounts, as well as separate credit card for personal use and business use. This will make organization of your taxes easy when the time comes. Also make sure you have all the documents with you that show the expenses you have made for the business in case you are audited by the IRS.
The time of taxation will not be gruesome for you if you have prepared for it the entire year and have not left everything for the last moment. Here is what you can do to get yourself organized for the taxes.
• Organize the paperwork of each month in specified folder marked for each month. They should include all the receipts, documents, deposit slips and all other important things that may come handy at the time of filing the taxes for your small business.
• Take some time out each month to reconcile your bank accounts and credit cards with deposit slips and receipts. This will save you the time and effort of doing it all in a single sitting.
Keep a Track of Your Revenue and Expenses
As a small business that pays taxes, it is important to keep a track of all your revenues and expenses. It is not easy to keep a manual record of these. Therefore, it is advised that you use an accounting software to create the financial statements easily, quickly and conveniently. All you need to do is update the software with your revenues and expenses and the leave the rest to the software. File your tax returns conveniently using these software generated statements.
It is important as a small business owner to prepare for tax filing and do the needful throughout the year. If you keep it all for the end, it is going to take a lot of time to do all the things necessary. Now that we have provided you the best tax tips for small business owners, it is up to you to make use of them when the filing time comes. As a small business, you cannot afford paying hundreds of dollars in penalties just by committing some common and small mistake when filing tax returns. Be vigilant with your taxes as you can be heavily penalized by the IRS in case of wrong filing.