Tax Tips for Small Business Owners
2021 tax season is right around the corner — are you ready? Running a business is not easy, especially when you have big goals you want to accomplish. The extra burden of filing taxes every year is usually not every entrepreneur’s primary concern or focus when trying to scale their business.
When it comes to your company’s financial health, making decisions without the appropriate guidance from accounting experts can be counterproductive, and that includes filing taxes.
It could even cost you money in the long run and induce a lot of stress you simply don’t need. So here are some tax tips for small business owners looking to successfully file their taxes this year and avoid 2 or 3 (or 10) headaches while doing so:
Make Sure to Claim All Revenue Reported to The IRS
The IRS knows everything. They get copies of all of the 1099 forms you get to compare the revenue you declared with the reports they have internally. So you need to ensure that the revenue you report is the same as the one on your 1099s.
If you fail to do so, they will definitely not like it, and you’ll find yourself in a tricky situation. You don’t want to leave out any source of income from the year because the IRS will find out.
Keep Detailed Records of All Business Transactions
One of the best ways to ensure smooth tax filing is to keep paper or electronic records of all transactions your business makes throughout the year. If you fail to do so, you could miss out on some important deductions or even be at risk for auditing.
At a bare minimum, you should invest in basic bookkeeping software that will help you keep track of all of your cash flow and expenses. But the best option really would be to hire a professional accountant or bookkeeper to take that over for you!
Keep Business & Personal Expenses Separate
If the IRS ever decides to audit your company, you want to have your personal and business expenses separated. If they see anything fishy with your business expenses, they may wish to conduct further investigation into your personal bank accounts, and that’s not something you want to have happen.
If you go on a business lunch, use your business credit card. If you decide to go on a last-minute getaway to Vegas, as tempting as it may be, don’t use your business credit card and stick with your personal bank account and cards.
Hire an Accounting Professional This Tax Season
Hiring a qualified accountant for tax season can definitely take some weight off of your shoulders and will ensure smooth filing. But is that really the only time you need them?
You’ll know you’ve found the right accountant when they commit to doing more than just preparing your statements and filing your taxes. If they don’t have more value to bring to the table, then they may not be the right team member to help your business grow.
Your accountant should also be a financial advisor who keeps track of your business transactions and makes sure you never run into cash flow issues. They should work with you to help you achieve your company’s goals and continue to scale based on accurate forecasting and sound business planning regarding budgeting and payroll.
At Level, we are committed to going above and beyond our client’s expectations when hiring a bookkeeper. Apart from business tax filing, we offer a wide range of accounting services, financial advisory, and planning to help you grow your business and reach your goals.
Give us a call today to learn more about our services!
