As a business owner, you may feel a little anxious during tax season. After all, dealing with an IRS audit is stressful and time-consuming. You want to make sure everything is prepared in a timely and accurate manner. You also want to ensure you maximize all deductions and credits to achieve the best possible tax outcome.
Proper tax preparation will give you peace of mind every year. Here are 8 steps you should take before you file.
Need help with filing your taxes?
Contact Larry L. Bertsch, CPA & Associates, LLP today!
8 Steps to Take Before You File Your Business Taxes
The tax deadline for 2021 is Monday, April 18, 2022. Business tax filing can be a little complex, so you won’t want to wait until the last minute to handle your return. Taking the following steps will help make the process go smoothly.
Make an Appointment With Your Tax Preparer
Doing business taxes can be challenging on your own. There are special rules that govern businesses, and if you’re not familiar with them, you could overlook something important that can cost your business. When you hire a certified tax preparer, you can trust that your tax return reflects all current IRS rules and regulations. They will consider all of your assets and leverage their accounting knowledge to prepare an accurate return. Your tax specialist will uncover all deductions and credits you qualify for now and also provide recommendations for saving next year.
Appointments can fill up fast the closer it gets to the tax filing deadline, so schedule with a Las Vegas tax accountant as soon as possible to take advantage of key tax deductions for 2021.
Collect The Necessary Documents And Receipts
For an accurate return, you’ll need to gather all tax documents and receipts related to your business. Having these ready for your tax preparer will save them time when processing your taxes, so you’ll pay less in overall tax preparation fees. You should have all forms that document any income that your business received in 2021, as well as records of any payments you made to independent contractors. Common forms include the 1099-INT, 1099-DIV, and 1099-NEC. Your receipts for business transactions will also help your accountant identify deductions your company may be eligible for. If you’re unsure exactly which documents you need, consult with your local tax preparer for advice.
Plan For Refund or Payment Plan
If you’ll be getting a refund this tax season, you’ll need to consider how you want to handle the funds. For example, if you expect to have higher income in 2022, you may want to apply it to next year’s taxes. However, if you believe your tax situation will remain fairly consistent, you can request a direct deposit or paper check for the refund amount. Lastly, you can choose to contribute the refund to an account such as an IRA or health savings account, or you can even purchase a U.S. savings bond.
Alternatively, if you owe taxes, you’ll need to pay them when you file or establish a payment plan that will allow you to pay your taxes over time. The IRS offers payment plans based on each business’s individual tax situation.
List Any Deductions
Small businesses are able to deduct many of their expenses on their tax return. These write-offs will lower your overall tax bill. Common business deductions include:
- Home office expenses
- Inventory costs
- Payroll expenses
- Commercial rent or storage
- Tax and licensing-related expenses
- Shipping costs
- Advertising expenses
- Computers and software
- Communication expenses
Take Care of Independent Contractors
As a business owner, you are responsible for issuing 1099-NEC forms to any independent contractors who made more than $600 from your business in 2021. To avoid penalties, both the contractor and the IRS must receive this form by January 31st each year.
Collect Vehicle Expenses
Vehicle expenses can add up to major tax savings. You will need to track the business use of each vehicle, including when the travel occurred and how many miles were for strictly business purposes.
Don’t Forget About Self-Employment Tax
Self-employed individuals will need to consider self-employment tax. This makes up the Social Security and Medicare tax for sole proprietors and individual contractors, and it can be quite substantial for those who bring in a good income. In this case, it’s generally a good idea to pay quarterly estimated taxes to reduce your tax burden in April.
Review Your Business Tax Return
Before you file, you should review your business tax return to ensure your forms are complete and accurate. This will speed up the processing of your documents and reduce headaches with the IRS.
It’s also a good idea to look at your tax return from the previous year and compare it to the current year. If you notice anything that you claimed last year, such as interest and dividends, that was overlooked this year, you’ll need to get the forms to your tax preparer right away.
Need a Las Vegas Tax Accountant?
IRS rules can change from year to year, so it’s important to work with a professional to ensure compliance. The office of Larry L Bertsch, CPA & Associates handles taxes for businesses in the Las Vegas area, and our certified accountants are up-to-date on all current IRS rules and regulations.
Whether you’re the owner of a brand new company or you’ve been established for many years, you can’t afford to have tax problems caused by poorly filed tax returns. Our team will make sure your paperwork is in order and filed in a timely manner. If you have past issues with the IRS, we’ll do our best to help you resolve them quickly. To get the help you need this tax season, contact us today for a free estimate.
