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Tax season is full of hysteria and confusion small firmsNo one wants to spend late nights poring over spreadsheets, reconciling expenses and filing last-minute deductions. But by early April, that grueling tax work feels inevitable. It’s no wonder that on April 16, many small business owners breathe a sigh of relief: “Finally, it’s over. We don’t have to worry about taxes for another year.”
Sound familiar? Okay, take a breath.
But then get back to work.
If you’ll be able to start early and incorporate tax planning into your overall business strategy, you’ll be able to minimize the stress of tax season, avoid fines and penalties, and perhaps even find a few extra deductions. Here are five belongings you need to do all yr long to manage your taxes.
1. Get organized
Building a good tax strategy starts with investing in good software. There are some great tools available for small and medium-sized businesses, including products like Intuit QuickBooks Online and Xero. Research the pros and cons, learn about pricing options, and how they integrate with other systems you may already have.
Accounting and bookkeeping software often includes a service for tracking receipts digitally, so you don’t have to search through a shoebox filled with paperwork at the end of the yr. Take the time to learn the way to use this feature and make sure everyone on your team is tracking their expenses in a similar way.
Close your books each month. This means ensuring that every one transactions are accounted for and any discrepancies are reconciled. By organising a modern back-office infrastructure with cloud accounting and bookkeeping software, you’ll be able to quickly review all of the previous month’s transactions. Any missing transactions or accounting errors could spell trouble for the future, so you wish to catch them early. You’ll be one step ahead of the pack by putting a monthly financial check-up on your calendar.
Separate what you are promoting and personal expenses. If you haven’t already, arrange a business checking account separate from your individual, and make sure you utilize a separate business bank card for all of your purchases. While it might be tempting to live off what you are promoting money accounts while scaling up, when tax time comes, these personal expenses won’t qualify for deductions and you’ll have a headache. If you withdraw money to pay yourself a salary, you can find yourself with much more taxable income than expected.
2. Deductions and tax reliefs for research
Growing small businesses often miss out on deductions simply because they don’t take the time to learn about them. However, many business-related expenses, resembling organising a home office, skilled fees, rent, office supplies, utilities, and travel, are deductible. Mixed expenses, resembling business meals, automobile and auto expenses, and insurance premiums, may qualify. Deductions for worker compensation, contract work, promoting, and education are also essential to track because they’ll reduce your taxable income and help what you are promoting grow.
If you do your research early, it’s also possible to find tax breaks available for your specific industry or state. Make sure you understand what you’ll be able to deduct AND what documentation you will want to do this. This way you’ll be able to create a paper trail for these deductions throughout the yr.
3. Know your tax return filing deadlines
Business owners need to understand and stay ahead of tax deadlines throughout the yr to avoid IRS penalties. These deadlines vary by business type and include things like corporate income taxes, payroll taxes and W2 filings. Here’s a good breakdown tax return filing deadlines for 2024
4. Find a great partner
Consider outsourcing all or a part of your financial operations to a trusted accounting partner. partner can enable you to streamline processes and replace back-office functions, freeing up time and money to grow what you are promoting. The right partner can manage your accounting, standardize reporting, optimize business processes, and provide dedicated support year-round. They can enable you to understand and plan your money flow, quickly discover errors, and enable you to fix them.
financial partner may enable you to stay awake to date with U.S. tax laws. With tax laws consistently changing, hiring a skilled will provide you with peace of mind that your returns can be filed appropriately. Your financial partner can enable you to create a customized tax strategy, mark up your tax liabilities throughout the yr, and hold you accountable to the strategy you develop.
If you already have an accountant and (*5*)I’m considering a change, Now is a good time to evaluate latest accounting options.
5. Be proactive
Whether or not you hire a partner to enable you to with your taxes, it’s a good idea for small businesses to create a payment plan for the yr. This spring, document all of your tax due dates so you’ll be able to pay your taxes ahead of schedule. If what you are promoting employs staff in one other state, it’s possible you’ll have liabilities there, too.
If you’ll be able to, file your annual tax return early to avoid an additional burden at the end of the yr. This also helps what you are promoting reduce potential penalties and related interest.
If you have a team that supports you, add quarterly budget summaries to your calendar so everyone can stay on top of money flow, budget, and growth goals.
Right now, the birds are chirping and the sun is beckoning. You and your team have worked hard to file your taxes on time and in order. The last item you wish to think about is 2024 taxes. However, it is necessary to spend a few hours planning for the coming yr and commit to a consistent schedule of severance payments and payments. Ultimately, these investments will enable you to reduce your tax burden, avoid unnecessary stress next April, and plan for what you are promoting to grow. With a solid plan, you’ll have the peace of mind to get out into the world and enjoy the sunshine after tax season.