Tax season is quickly arriving, looming over the heads of business owners as they search through piles of paperwork that is required to file their taxes for the year.
This often means a daunting task of documenting deductions and preparing for the possibility of a massive property tax bill come spring. Your pulse may be racing a little faster with the thought of legalities that accompany expense reports, legitimate expenditures, and quarterly taxes.
Frequently, there are innocuous errors that could be lurking in your file cabinets which may threaten your company’s longevity. Here are some tips for making it through the 2016 tax season, hitch free.
Nine Tips for Surviving the 2016 Tax Season
While the busy season is often frightening to many business owners, there are numerous ways you can ensure that you will survive and even thrive as the deadline bestows upon us. As you begin preparing for this busy time, there are a few essential tips and revelations that can make the process a smooth one.
1. Know Your Deadlines
As Tax Day sneaks up on us, most taxpayers believe that this is the hard deadline date for all taxes to be paid in full. This is when tax season trickery can be hard to decipher.
Self-employed individuals are required to pay quarterly taxes including Social Security, Medicare, and Income Tax. If these are not paid on time, it could mean more monetary fees in the future.
2. Get an Early Start
When it comes to completing your taxes, procrastination can be your worst enemy. Get a jump start on your taxes by gathering your documents as early as the end of January. This action will provide you with more than enough time to meet the IRS tax deadline. You will also eliminate the sleepless nights that are associated with unfinished taxes.
3. Set Up a Tax Schedule
The tax planning process is rarely straightforward. Most people find that the process can be a drawn out. Planning a schedule just as one would a project could be especially useful in keeping the preparation process on track. Here is a good example of a possible tax schedule for 2016.
- January 28 – February 5 – Gather your tax documents.
- February 7 – 10 – Categorize the documents and put them in order.
- February 15 – Take your documents to your Las Vegas Business CPA.
The magic of getting anything accomplished is putting it in writing. Creating a schedule provides you with a tangible organization tool that can keep you on task.
4. Organize Your Documents
There are approximately 4 months between the New Year and the deadline for your taxes. This is plenty of time to gather all of the pertinent documentation to provide to your Las Vegas Certified Public Business Account (CPA).
The easiest way to prepare for your personal and business taxes is to keep all of your information in one location. Separating your expense reports, receipts, proof of income, donations, and any other pertinent information within the same area will help keep it organized throughout the year. It is also a good practice to keep these documents filed and stored away for years to come in the unfortunate event that you are audited by the IRS.
Documentation that your CPA will need from you are:
- Financial statements that detail cash flow, balance sheet, and income
- Vehicle log
- Capital asset activity
If you are not sure about additional documents, you will need, contact your Las Vegas CPA to get more accurate information. By having this documentation readily available, you will expedite the tax preparation process.
5. Keep Separate Business and Personal Expenses
The IRS has strict rules about commingled business and personal accounts. It is essential to develop a strategy to keep your personal accounts and credit cards separate from business accounts. At the very minimum, you should have a separate credit card for expenses related to your business. This will give your Las Vegas CPA a clear idea of how to allocate your expenses on your documents.
6. Set priorities
Everything may appear to be urgent, but setting a priority for deliverables when planning for taxes can save you a lot of stress. Some find it helpful to rank their tax challenges according to what will likely have the greatest impact on their finances.
7. Use Specialized Software Programs
For those who find accounting as one of the most worrisome threats to their business, bookkeeping through easy and cheap software programs can help ease the burden. A few include Freshbooks, which is a cloud-based automated billing and expense-tracking software, Outright, which categorizes expenses into IRS-approved categories, and Shoeboxed, which organizes receipts effortlessly.
8. Discover Hidden Deductibles
There is a wealth of opportunity that lies in hidden deductibles that can help lower your overall tax liability. Multiple items are eligible for deductions depending on what they are being used for and how they pertain to your business. These include your car, employees’ salaries, retirement plans, business insurance, work furniture, travel expenses, and meals to name a few. A simple research can unravel the endless possibilities.
9. Hire a Las Vegas Tax Advisor
Professional tax advisers can help clarify certain aspects of your deductions and credits to ensure that you are not overpaying on your taxes. These savings outweigh the cost of the service and can limit the total liability of your business, allowing for more potential of investment opportunities and money allocated to your company.
There comes a point in your small business that you have to outsource your stressful tasks. As your business grows, you will need to use in-depth tax strategies that will maximize your deductions. You can also work with an accounting firm to simplify the tax planning process. They can handle much of the complexities and direct your efforts so that you aren’t spinning your wheels unnecessarily.
Larry L. Bertch is a Las Vegas CPA who has years of experience completing taxes for small businesses like yours. He consistently takes classes to remain up-to-date on the newest tax changes. For more information about his services, call 702-919-7697 for a free consultation.
This year’s tax season does not have to ruin your first quarter of the year. Following these tips and taking decisive action will make the tax season a breeze.