Just because it’s not currently tax season doesn’t mean that we can’t still learn about the tax process. Taxes are often the bane of business owner’s existence. It’s an uncomfortable and stressful time, but it doesn’t always have to be. While it’s impossible to completely limit tax stress, these tips can help you to make a smoother tax filing every year.
Here are some awesome tax tips to take into consideration for next year’s filing.
- Keep your personal and business expenses separate. This seems like a no-brainer but business owners constantly blur the lines between credit cards and bank accounts. The more separate you keep these expenses the easier tax filings will become.
- Always file your foreign income verification statement ahead of time to avoid any nasty t1135 penalties.
- Hire a tax accountant who is familiar with your type of business dealings. It’s cheaper in the short run to do taxes by yourself, but hiring someone outside the business to look over your financial information can save you a lot of cash and time in the long run.
- Understand how estimate taxes work. Estimated taxes are a common problem among people who run small businesses. The first year of business it’s okay to not nail your estimate taxes perfectly, but every year after if you’re not within 10% accuracy you can end up paying annoying fees.
- If you hire someone within your family to work for your business you should make sure that the relative does everything that the other employees do. Otherwise this can be viewed as nepotism and you may incur legal troubles.
- If you have less than ten employees with average wages less than $25,000 per person, you can claim a health credit. If you did not owe taxes during the filing year you might be able to carry the credit forward.
- Deductions are the best aspect of taxes. They’re an amazing way to quickly get back cash or reduce how much you owe. If you have any stock contributions which have appreciated you can deduct those appreciations from your taxes.
- Always stay organized. Print off all important documents and file them appropriately. You should always be prepared for an audit in case there is one. Staying organized will help you to file your taxes sooner and more accurately. Create a filing system if you do not have one so you can stay on top of your taxes all year.
- You can stay organized by setting aside a few hours each month, or one hour a week, to keep your papers organized. Make this a habit.
- Use online software to track the revenue you’re bringing in and all expenses. A great tool is QuickBooks Online which will make staying organized much easier. Come tax time you can transfer your information straight over for a pain-free process.
- A lesser known deduction is the home office deduction. If you have a home office then you should definitely cash in on this. Measure out your room and report the square footage of it divided by the footage of your house and the total cost of living. Just make sure that this is only a work space. Sometimes during audit’s the IRS will want to see a picture of your office for proof. If there’s kids toys or a DVD rack it will not count.
- There’s also an auto expense deduction. The deduction counts for 54 cents per mile, as of 2016. This can be handy if people drive often in your business.
- There’s even food-related deductions. If you have wined and dined clients or held an office party you can deduct half of your food expenses.
- Hire a credible outside administrator to deal with providing your employees their 401(k) plan and any other tax benefits your employees receive. These administrators include Vanguard and Fidelity.
- Understand how the Affordable Care Act works. The Affordable Care Act is constantly changing as political parties fail to agree on how the nation’s health care should work. This means that rules are constantly changing which could negatively or positively affect your business. Make sure that you talk to an accountant who is knowledgable about the national health coverage to guarantee an accurate filing.
There’s a million tax tips out there that can benefit your business and your accountant will know more and help your filing go as smoothly as possible next year. Here are fifteen that every business should be aware of in order to get the biggest return possible or to at least save money if they are required to pay in more.