Tax time is exciting for some who are expecting a large refund, but if you're a small business owner, chances are you may be sending a check to the IRS - not exactly exciting. To help you keep track of your receipts and other paperwork when filing taxes and to prevent costly mistakes you should use a small business bookkeeping service and a professional tax service. Read on for things you can do to help make tax time a smoother process.
Hold Onto Receipts
Receipts need to be kept so you can use them for deductions for expenses paid for your business. Don't toss those receipts. Keep them and put them into a folder marked expenses. These receipts need to be on hand to prove that those purchases were made. Without the receipts, your accountant may not be able to deduct those expenses for you, and you could end up in trouble with the IRS without proof.
Keep Up With Tax Laws
Tax laws are usually known by your accountant, but you should be up to speed on any new changes as well. If your accountant misfiles something because a change in the laws, you could be the one that ends up in hot water. Keep up with tax laws, especially those that affect small business owners.
Watch Your Deductions
Some things can be deducted, but they have to be depreciated (such as computers) and cannot be deducted as an expense. Other types of equipment are the same way. Keep an eye on these deductions and read up on what needs to be depreciated.
Other things such as deducting a portion of your mortgage because you work out of your home need to be watched as well. If you don't use a room solely as an office space, you can't deduct that room on your taxes. The room should be used solely for your business, not just once in awhile. The square footage is figured out and a percentage of your mortgage can then be deducted.
You may think about filing your taxes quarterly to help prevent having to pay penalties to the IRS. The IRS doesn't want to have to wait for their money, so file quarterly to give the IRS their payment. Talk to your accountant about having your taxes filed quarterly rather than once per year.
Filing taxes as a small business owner isn't exactly an exciting time. It's stressful and takes time. Use a professional bookkeeping service to help you stay organized and a tax service to file your taxes for you.