Tax season can be a nightmare for an accounting department at a corporation or for a small business owner. Small business owners might think that taking on their taxes alone is the best option. Instead of investing in a professional accounting firm to do their taxes they spend countless hours trying to make sure their information is correct. According to Randolph Law Firm, the stress along with the tax breaks that can be missed along with complexities regarding certain legal entities of a business can be impossible to navigate. The following are tips on how to prepare your business taxes in order to make tax season go by without a hitch.
Gather Financial and Expenditure Records
The toughest aspect of tax season for a business owner that is unorganized is finding all of the records they need to file taxes. Missing out on income that should have been reported can lead to penalties depending on the percentage of income that was underreported. There are a number of organizational tools that can be used to make this easier than in the past. QuickBooks is a great option as it can integrate with a number of other platforms. For companies that have paid very little in terms of taxes quarterly, you are likely going to have to pay in. Those that did file quarterly taxes could receive a return depending if they overpaid during the year.
Expenses can be a tough part of filing taxes if you do not have receipts or transactions organized. There are a number of apps that can integrate with accounting platforms that can allow you to organize and categorize different expenses. Rent is a fixed expense that can be deducted easily but expenses like software subscriptions, client entertainment, and costs for employee perks need to be incorporated. The last thing any business owner wants to do is pay taxes on revenue that was allocated elsewhere to market or grow the business.
The tax date was pushed back to July 15th in 2020 due to the Coronavirus pandemic. The federal government took an understanding approach to the issue as many people that had to pay taxes when filing could have struggled. April 15th is the usual deadline although it is recommended to file earlier which will make it easier if the return has to be amended. The last thing that any business wants is the IRS to start garnishing income to pay off tax debts. Not only can this impact cash flow negatively, it can lead to having to let people go. The IRS is willing to set up payment programs but the money you owe will have interest tacked on to it.
Let Professionals Handle It
Organization will make it easier to file your taxes but true tax preparation should be left to professionals. Accounting firms can help you save money that will cover the cost of their services. Take the time to look for the top accounting firms for your type of business as this might differ. Leave it to professionals as they can also help provide proof of payment or expenses in the case of an IRS audit.
Preparing taxes will take work but it will be a weight off of your shoulders once tax season is over. Look into your options when filing your taxes as it is always better to have a professional handle this.