Here’s how to make the most of small business tax prep this year.
You may think that you’ve got your small business tax preparation under control for the upcoming tax season, but with ever-changing tax rules and laws and even just shifts in your company’s day-to-day accounting needs, it’s always best to stay on top of key info you should know. Move forward with confidence when you are armed with accurate information and the accounting support your business requires.
Here are 5 key pieces of information you should know about small business tax prep:
#1: The IRS Provides a Tax Calendar
Did you know the IRS has a tax calendar available to both small businesses and the self-employed? This calendar provides an easy way to create a detailed map of your company’s fiscal year so you can see when you need to take care of tasks like filing W2s or W9s and filling out your return. It’s a handy tool to have on hand for small businesses that would like to have a handle on when they need to make their tax payments.
#2: Mixing Personal and Business Accounts Can Cost You Dearly
Given the often tiny size of many small businesses, it’s really easy for the business owners to mix up their personal expenses and their business expenses. You may think that paying for a weekend lunch with your company card isn’t that big of a deal, but the IRS may see it differently. If you mingle too many of your personal expenses with your business expenses, you run the risk of the IRS looking at your business as more of a hobby versus an actual business. If that happens, the IRS may strike many legitimate business expenses from eligibility, causing a tax mess for you. Simply separate all of your business bank accounts, credit cards and lines of credit so you protect your company.
#3: New Small Businesses Can Write Off the Cost of Starting the Business
If you’ve started your small business in the past year, you can write off the expenses or the “deductible startup costs” you had to spend to get the business up and running. This can be a very important deduction that can help you lessen the high expenses you’ll incur in the first year, including things like advertising fees, labor supply, and travel costs.
#4: Payroll Tax Mistakes Can Cost You
According to the Small Business Administration (SBA), payroll tax compliance is an issue that many small businesses struggle to comply with. Mistakes end up in IRS penalties, so it’s important to stay up-to-date with payroll tax deposits. Outsourcing this function to an accounting firm can help ensure you avoid costly mistakes.
#5: The New Tax Bill Can Cost You
It’s critical that new businesses understand the new tax bill so they don’t end up with costly penalties. For instance, small businesses used to be able to deduct 50 percent of the money they spent on client entertainment costs and expenses, but that’s no longer the case. This restriction doesn’t extend to meals, though, so you can still deduct there. Info like this can be a lot for a small business to be responsible for; it may make sense to have a knowledgeable outside firm handle it for you.
Get Tax Prep Right This Year with Help from Accounting Partners
Reach out to experts at Accounting Partners today at 678-990-0924 for a free consultation to learn how our professional accounting team can help with small business tax prep. Being aware of what to do and what not to do can make all the difference in how much your business spends each year. We are here to take some of the hassle and complexities out of the tax preparation process for you.