Tax season: It can be stressful for any small business owner. The good news is that there are some simple things you can start doing right now that will help you feel more prepared for tax season, lessening that stress.
Here are eight year-round habits you can begin using today:
1. Separate the business from the personal. One of the most important things you can do is to keep your business bank accounts and transactions separated from your personal accounts.
2. Plan for quarterly estimated tax payments. If you are required to make quarterly estimated tax payments, make sure you add these dates to your calendar to avoid unnecessary tax penalties for non-compliance:
- April 15 (for 1/1 – 3/31 income)
- July 15 (for 4/1 – 6/30 income)
- October 15 (for 7/1 – 9/30 income)
- January 15 (for 10/1 – 12/31 income)
3. Hire the right people. If your business can afford it, hiring bookkeeping, payroll or accounting staff can be enormously helpful by freeing up your time to work on other things, and giving you some peace of mind that those key tasks will be handled by someone who knows what they are doing.
4. Organize your receipts. Keep all receipts related to your business, so that if there are deductions to be claimed, you’ll be ready to claim them come tax time. Be sure to organize your receipts (either in paper form or electronically) by category. This will help you both be prepared for tax preparation and for a potential future tax audit.
5. Track your mileage. If you use your personal vehicle for business, be sure to keep track of miles driven, the business purpose and the date, so you can claim the maximum deduction. For 2016, the IRS available amount is 54 cents/mile for business purposes.
6. Take advantage of education. If your industry requires continuing education to maintain professional licenses or certifications, you probably already know that you can deduct certain costs of such training, but you may also be able to deduct expenses associated with providing your employees with training to improve their skills. Be sure to keep good documentation for any expenses related to professional development or education.
7. Keep records for business travel. In addition to the vehicle mileage deduction, if your business requires travel, you may be able to deduct some of your expenses such as airfare, lodging, and a portion of your meals and entertainment. As with other receipts, maintain good documentation.
8. Charitable donations. If you have unused or unsold inventory, consider donating it to one or more charitable organizations. Not only will this free up space for inventory you can use, but you may also be able to take a deduction for the donation.
“Tax season can be stressful for small business owners, but it doesn’t have to be,” says Senior Partner, Scott Klein. “By incorporating these tips into your business now, you’ll be ready to breeze through tax season next year, so you can get back to focusing on your business.”
For more information, contact us to find out how Klein Hall CPAs, a Naperville and Aurora accounting firm, can help ease your tax-season stress.