Small business owners take a lot of risks in order to succeed. However, they should never take risks when it comes to their taxes. Entrepreneurs often overpay on their taxes, which can mean losing a lot of money over a period of years. Of course, no one wants to underpay either since that can lead to serious fines and penalties. Small business owners who want to make sure they’re paying the right amount down to the penny, can use these tax tips.
Manage Business Finances Carefully
Small business owners know how important it is to stay on top of their taxes, but what are some ways to do that? One key to paying small business taxes properly is to keep personal and business finances separate. It’s important to use separate checking accounts and credit cards to handle expenses and profits. It may seem more convenient to handle some things with a personal account, but come tax time, it will be much easier to track down the numbers that are needed if these financial worlds are kept completely separate.
Keep Track of Deductions
Any receipts that are received for transactions related to a business should be saved. If a business owner doesn’t want to keep the paper receipts, there are apps and online programs that can digitally store receipts for them. These documents are essential for calculating expenses and keeping track of potential deductions, such as business equipment and supply purchases. Other deductions that may need to be tracked include home office deductions, charitable deductions, and mileage deductions. These small things can add up to huge savings when it’s time to pay taxes.
Learn to File Taxes Quarterly
Some small business owners actually have to file taxes four times per year instead of just once. Fortunately, the process is much easier than it sounds. Small business owners who need to file quarterly taxes, can set up an online account with the Electronic Federal Tax Payment System (EFTPS). They can pay online with a debit or credit card in just minutes. Business owners who are struggling to determine how much they owe can hire a tax professional to help them calculate their estimated quarterly taxes.
Find a Tax Attorney
Many people are able to do their personal taxes on their own. But when it comes to small business taxes, it’s more complicated. Someone who wants to make sure they’re not overpaying or underpaying should consider hiring a tax attorney with experience working with businesses their size. When calculating the average cost of using a tax attorney, business owners should keep in mind that there are a number of unique benefits these professionals can provide, like helping deal with back taxes and finding more deductions to reduce the total tax bill.
Don’t Forget to Save for Retirement
In addition to providing financial security for the future, retirement savings can be another way to reduce a tax burden. For example, small business owners can put money into a traditional or Roth IRA and it won’t be taxed until the funds are withdrawn in retirement. A tax attorney can figure out which retirement savings option is right for any individual.
Small business owners can use these tips to stay on top of their small business finances so they’re ready when it’s time to pay their taxes. Small business owners who have tried everything and are still bewildered by taxes and are unsure if they’re handling them correctly should get a qualified professional on their side for the best possible results.