Amidst the multitude of details involved in starting up and running a small business, one of the most complex tasks involves tax preparation. This multifaceted undertaking is easiest to accomplish if you work on it throughout the year and not just at tax time. Here are some tips to keep in mind to help simplify tax preparation.
Separate Business and Personal Finances
Always keep your personal and business checking accounts, savings accounts, and credit cards completely separate. This makes your business financial data easier to access, and also enables more deductions at tax time. Don’t forget to include your home office if you work from home, which you should maintain as a space completely separate from your living area.
Pay Attention to Details
Throughout the year, keep receipts and other records of the travel mileage, meals, charitable contributions, and other deductible expenses that you plan to claim at tax time. Digitizing these items makes them easier to organize. Remember that to avoid penalties you’ll probably have to make estimated quarterly tax payments. Additionally, in your anxiety to appease the IRS, don’t forget your obligation to pay state and local taxes.
Keep Up to Date
Continue to educate yourself with the latest tips and updates on small business tax preparation. One excellent source of information is the website of the Internal Revenue Service. Another organization that often posts informative articles on tax preparation is the U.S. Small Business Administration. You should also remain tuned in to industry news from your local small business community.
Get Some Help
Using cutting-edge accounting software makes it easier to accumulate and organize information for yearly tax preparation. Hiring an accountant to assist you with year-end tax preparation may save you money, as these professionals can help you take advantage of additional deductions of which you are unaware.
For more advice on small business tax preparation, get in touch with Bear River Financial.