Small Business Tips for Tax Season

It is that time of year again when small business owners are gathering up documentation, searching for receipts, and getting other paperwork together so they can get their business taxes prepared and filed on time. Preparing and filing taxes does not have to involve spending several days or even weeks of your precious time gathering everything you need.

If you always keep tax season in mind throughout the year, you can plan ahead and have most of your tax preparations almost completed, come tax time. Use these suggestions and implement them into your business, if you are not already using them, to make next year’s tax time easier on you.

Small Business Tips for Tax Season
  • Obtain and use accounting software. Even if you use an accountant to prepare your taxes, accounting software makes it easier to keep track of the business’s income and expenses. You can enter receipts for meals, entertainment, gas mileage, and so on, throughout the year as they occur.Most applications also have a comments field where you can enter in relevant notes and provide reasons why various expenses were related to your business, just in case the IRS decides to do an audit. You can also scan and electronically attach digital versions of receipts in some apps and never worry about having to find a lost receipt again.
  • Conduct physical inventory counts every quarter. Many small businesses end up with ghost assets on their books, which are assets that are no longer usable or are missing. Along with conducting physical counts, track your assets and inventories in an asset management application. This way, when you notice discrepancies throughout the year, you can determine where the problem is, and, if you cannot locate a missing asset, you can talk to your accountant about writing it off.

Once tax time rolls around, if you followed the above suggestions, you will be ready to start gathering the information you need to file your taxes. Most accounting and asset management software programs have reporting tools, so you can quickly generate the information you or your accountant needs. Further, take the time to think about your expenses from the previous year and what deductions you could potentially be overlooking, such as:

  • Section 179 Deductions for Property – Any new property you purchased for your business, up through December 31, could qualify for this deduction.
  • Home Office Deductions – If you work from home and have a dedicated home office, you can deduct a percentage of household expenses, like insurance, property taxes, and utilities.
  • Carry Forward Health Credits – The Affordable Healthcare Act allows you to carry health credits forward if you do not owe taxes, as well as deduct business expenses against any remaining premium.
  • Vehicle and Mileage Expenses – You can deduct business expenses for both personal and company owned vehicles.
  • New Business Startup Costs – If you started your business in 2015, there are several deductions you may qualify for to help reduce your tax liability.

Remember to consult with an experienced tax accountant to determine exactly what deductions your business could be entitled to receive.

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