Tax season will be here before you know it, but the right preparation can turn that thought from terrifying to triumphant! Keep reading for some important tips you can use to make sure your business is as prepared as possible for this upcoming tax season.
Prepping for Tax Season
Developing strong end-of-year practices is one of the best ways to make each tax season a breeze. And these practices are even more important for small businesses. If you want to make sure you’re reaping all the benefits of tax advantages like deductions and write-offs, work with a professional accountant that specializes in small business’ finances.
Plus, keep reading for some end-of-year best practices!
#1: Make Sure You’re Caught Up
The first step toward not getting overwhelmed by tax season is making sure all your financials are up to date. Most small businesses pay estimated taxes based on the previous year’s figures—so do your best to determine how the past three quarters compare to last year. This means, as a business owner, you can keep track of your expenses in the buildup to tax filing in April, and offset any costs that occur between this period and their final submission to the IRS.
#2: Double Check Inventory & Uncollectable Debts
Some situations for small businesses aren’t ideal—like products that just don’t seem to sell, or debts that just aren’t collected—but they’re at least deductible! Old or unsellable inventory can be counted as a deductible when tax time rolls around. This applies to uncollected debt as well. What qualifies as uncollected debt will depend on your particular business model. Regardless, you’ll need to be sure you have proper documentation!
#3: Year-End Investments
The more deductions, the better. Make sure you’re saving as much as possible on your taxes, and taking advantage of all the government-sanctioned exceptions you can. If you’ve been considering upgrading some equipment or purchasing some extra business property, now’s the time to do it! But don’t do this just for the sake of doing it. If you’re going to make bigger purchases, make sure they will increase the profitability of your business as well.
#4: Check Your Business’s Retirement Plan
It’s not uncommon for small businesses to offer less conventional perks to their employees, but it’s hard to beat the tried-and-true perk of a great retirement plan. As you’re prepping for tax season, take a look at your retirement offerings. As a small business, you have access to specialty retirement plans separate from the regular 401(k) and IRA plans.
#5: Work With a Professional
You most likely saw this tip coming—one of the best things you can do for your small business finances is trust them to a professional. They’ll make sure you’re getting all the tax benefits you can, and that everything stays organized and compliant. Tax law is complicated. Failing to correctly file your taxes as an individual can lead to a sticky situation, but for a small business it can mean disaster. Make sure you’re working with someone you trust!
Small Business Tax Experts
Banks, Finley, White & Co. is standing by, ready to help you with all of your small business accounting needs! Over the past 45 years, we’ve evolved with the changing accounting landscape. We can help you navigate tax time with ease. Reach out to us today to get started!