Taxes

10 Steps to Business Taxes Done Properly

An article like this would not traditionally be released until December but we at Exceptional Business Solutions believe in being overly prepared and diligent when it comes to financial management.  Your decisions as to how organized you will continue directly correlates with the level of challenge you may experience when preparing your business taxes.  If you’re like most small business owners, you’re digging through a shoe box of receipts, preparing to file your  tax returns.  This year, like last year and the years before, your mutterings are part prayer that everything is indeed in the shoe box, and part promise to do better next year.

Plan Now for Business Taxes  – Getting it Done Right

It should be a routine habit that as soon as you complete a prior years’ business tax return, you should set aside time to tackle this year’s paperwork challenges while they are still fresh. This means on a monthly or quarterly basis taking a meticulous approach to reviewing all of your income and expenses. Below are ten easy steps you can adopt today to make filing this year’s tax returns easier:

1. Sync Small Business Accounting Software with Your Accountant

This simply means to use the same software that your accountant and/or bookkeeper does or a compatible program.  By doing so, everything from payroll taxes to quarterly P&L statements and end-of-year tax filing becomes automatic.

2. Use Online Banking

Online banking can help you keep records straight for tax time and, best of all, help you stay on track from month to month.

3. Record Everything Electronically

When possible, always scan bank statements (if you’re not using online banking), vendor statements, receipts, credit card statements, and everything related to the cashflow of your small business.

4. Backup Electronic Records           

All financial records should be routinely and regularly backed up.

5. Track Health Insurance Policies

The Small Business Jobs Act entitles a sole proprietor to reduce self-employment tax by the amount of deductible health insurance premiums. Check with your accountant for details, but do track policy costs throughout the year.

6. File Online – It’s the Law

Small businesses are required to file 941 forms (quarterly payroll taxes) and unemployment forms electronically.  Be warned, the fines for failing to file online and on time can be significant.

7. Use Electronic Calendars

Odds are that you already use an electronic calendar on your computer or smartphone.  However, are you putting it to good use by also using it to remind yourself of which trips and meals qualify as tax deductible – thus giving you a good way to double check your deductions for your business taxes?

8. Profit by Hiring

In the current economy, many businesses are reluctant to hire employees. However, there may be merit to the government offering employers tax credit for each new employee hired. This is an incentive that should not be dismissed.

9. Buy More Assets with Tax Credits

The government has continued to encourage small businesses to purchase assets by expanding several incentives. It is important that your accountant and/or bookkeeper stay abreast of the many incentives such as the ability  to claim a 100 percent bonus depreciation deduction for new assets purchased (introduced in 2011) in order to take advantage of these opportunities.

10. Avoid Huge Penalties for Late Reporting

Accounting software can automatically generate 1099s and W-2 forms to aid in the completion of required forms for your business taxes.  If you fail to start issuing these forms according to laws enforce by the Small Business Jobs and Credit Act of 2010 you will be subject to severe penalties.  In the end, you could be left with nothing but your shoe box of receipts.

Exceptional Business Solutions, LLC offers businesses a diverse range of management support, training, and event management services.  For more information about how your organization can achieve measurable and effective change in managing others, click here to contact us.

I hope you’ve enjoyed these tips. If you’ve tried any of these, I’d love to hear your experiences with them on our Facebook Fan Page.

Photo credit: New Haven Register (http://elmcityexpress.blogspot.com/2011/01/free-tax-prep-help-for-low-and-middle.html)

 

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