With tax season firmly in place and full steam ahead, it is always a good to review tax methodologies and see where you can improve – all with the hope of reducing your tax bill. With that thought in mind, here are some great tax tips for small business owners (SBOs).
Running a small business is no small feat – its enough having to drum up new business and handling the minutiae of overseeing a staff – much less needing to be on top of paperwork and financial documentation, such as business taxes. It goes without saying of course that if you own your own company, you should at least consult a CPA or certified public accountant to assist with your quarterly and yearly financial needs.
However, just in case you do not use a CPA (or even if you do and you want to make sure they are being thorough), here are some tips to help you – and your company – during the busy tax season.
Avoid Raising a Red Flag That Could Lead to An Audit
As a small business owner, your chances of being audited by the IRS are greater than an individuals. We wrote an article recently on the types of actions that can increase your odds of being audited, and it is always a good idea to avoid these situations. You can find the article here. And remember, when in doubt, consult a tax professional!
Keep Good Records
This one probably goes without saying, but just as keeping good and highly detailed tax records is important in your personal life, it is also crucial in your business dealings as well – more so, in fact. Creating a filing system (both paper and digital) is a good idea. One technique you can use is to create folders on a computer labeled for each type of expense, and as you make purchases or pay payments, scan the documents into your computer and store them in the appropriate folder. You can also keep a tax diary to log and keep track of your expenses throughout the year.
This not only helps make sure you do not lose any documents, it also saves you a ton of headaches at the end of the year, as you won’t need to scramble to find tax documentation and receipts. Plus, you’ll earn brownie points with your certified public accountant!
Small Business Healthcare Tax Credit
If you offer heal insurance as a benefit for your employees, you should check to see if you are eligible to receive the small business health care tax credit. The IRS has a page with more details – Do I qualify for the small business healthcare tax credit?
Small Business Jobs Act Tax Provision
While we are at it, do not forget about the Small Business Jobs Tax Act Provision, which has some helpful tax provisions (17 in total, some of which have expired already) designed to help small business owners.
These are just a few of the steps you can take to reduce your business tax liability each tax season. If you have any questions about these small business tax tips – or any business and financial questions in general – please feel free to contact Clayton Paulk & Associates – we would be more than happy to help clear up any issues and offer sound tax, business, and financial planning advice!