How To Prepare Your Small Business For Tax Season
As the new year rolls along, it’s important for small businesses to be mindful of their working capital and the approaching tax deadline. The IRS mandates that Americans must have their taxes filed by April on a rolling deadline that changes each year. This means small businesses across the country must take the necessary steps to ensure they are cooperating with state and federal regulations while also readying their paperwork to be submitted in a timely manner.
Waiting until the last second isn’t the best strategy because it leaves you with little to no room for error, or else you might have to file for an extension, which can further delay the process and set your business plan back. By preparing early, you can settle all financial matters of the previous year and get to work on making your business a success in the new year.
Every financial document that has yours or your business’s name on it should be compiled in one area. This can be an exceedingly tedious task because it might be difficult to locate an entire year’s worth of paperwork and file it accordingly. That’s why it’s important to already have an accounting system in place where all your documents are recorded or kept in a secure location for your convenience.
The IRS will be interested in all business matters, including earnings, working capital, returns, payments, services and a whole host of other financial necessities. If you’re not sure whether certain information is needed, it’s best to err on the side of caution because there’s nothing worse than having to redo your taxes or potentially face an audit due to a preventable mistake.
Look for deductions
The tax code changes frequently and contains a plethora of rebates and incentives for businesses to save money. If your office or warehouse is fitted with green materials, then you’ll not only be saving money on your monthly utility bill, you can also get a tax break. Further, depending on the number of employees you have, you could be eligible for a number of deductions. If your small business offers health insurance or retirement benefits, then you could apply for a deduction due to the costs associated with administering these plans.
One of the most important tax breaks you should be aware of lies in Section 179 of the tax code, which allows you to claim equipment that you’ve purchased in that year. To further cash in on savings, you can opt for leasing equipment rather than having to pay a high price upfront.
While you’re at it, help your employees get a move on their own taxes this season so that your staff is fully prepared for the new year.