If you’ve succeeded in starting your own business, then you know that it comes with its twists and turns, triumphs and failures! One of the new challenges that come with owning a business is navigating tax season. Filing taxes for a small business, or your own business in general, becomes incredibly more complicated compared to what you may have been used to in the past. There are some very important things you can do to prepare for filing your taxes including getting started ahead of time, and calling the tax professionals at Tax Relief USA to help.
Secure Your Bookkeeping
It’s really important to get your bookkeeping together right off the bat. There are tools that can be very useful at getting your bookkeeping handled in-house. Freshbooks and Quickbooks are some common household names when it comes to accounting programs. They are easy to use, are all-inclusive, and are especially great for small businesses. As much as you think you could do it on your own as the business owner, it’s always a good idea to hire an accountant or bookkeeper to handle your budget and finances. This can help solidify your budget and get you prepped and ready for filing taxes. A professional who can be 100% dedicated to your bookkeeping is crucial to maintaining a secure financial position, and can save you from any surprises down the road.
Keep All Your Receipts
Keep your receipts! Any purchases you make related to your business should be stored and tracked. Whether you write everything manually in a book as backup, or enter all your receipts into a program like QuickBooks, it’s important to keep the originals as well. When the time comes to file your taxes, you’ll want a record of all your business expenses. In the hustle and bustle of starting your business, you may be running to the store, picking up things for your office space, or even home office and not think to keep those receipts. All of those purchases may be eligible for a deduction, and you will want to track those expenses from the very beginning. Before filling out any tax forms or when reporting business income, you will want to have all records in front of you that report both earnings and expenses.
Maximize Your Deductions
It is to your advantage to maximize your deductions and minimize your taxable income. Lowering your taxable income can lower the tax penalty and will allow you to put that money back into your business. There are a number of tax deductions available for small business owners to take advantage of. Rules can be limited, but make sure to note any expenses put towards business-specific activities. Some possible deductions include mileage, health insurance, self-employment taxes, software purchases, costs of advertising, and banking fees.
Type of Return You Need to File
There is no one-size-fits-all tax form that covers all small businesses. Depending on the structure of your business, you may file different forms, as some are interchangeable. It’s important to fully understand what kind of small business you are, and then determine which specific forms you need to have. A tax professional can help you with this, but the basic idea is something like this:
- Sole Proprietorships and Single Member LLCs will need to fill out Schedule SE for self-employment taxes and Schedule C for business profits
- Corporations fill out form 1120, for corporate tax returns
- S-Corporations fill out form 1120-S
- Partnership or Multi-Member LLCs will fill out a Form 1065 for the business, and each member will need a completed Schedule K-1
Work With a Tax Professional
Above all else, hiring a tax professional is a smart move whenever you are filing your taxes, but especially for a first-time filer business owner. They know how to navigate complicated tax forms and code that you are seeing for the first time. A good tax preparer will help you maximize your deductions and get you the biggest return possible.
Tax prep professionals like Tax Relief USA, not only know how to get you the best refund possible, but get a return by people who know how to file without red flags. Watch out for tax preparers who only file returns, but don’t help with tax issues. They probably aren’t filing your taxes in a way that prevents potential problems down the road, because they don’t deal with it on a regular basis. Our objective is to help our clients flourish in their business, and that includes getting the most out of your refund. Call us for a free consultation!