Tax season tend to be the most nerve-racking time of the year for most small businesses. This is mainly because of the fact that instead of getting ready throughout the year for tax season, small businesses generally tend to wait until the last minute.
Here are some small business tax tips for the year 2017 that will help you not only to reduce the stress, but also save you money and time.
Set Up A Filing System
Do you have lots of unopened bills and financial records? And you don’t know what to do with this? If that is the case, you need a filing system to clear up all the mess. Setting up a filing system is important and can help you to manage all your pertinent financial documents in a way that information can be created, shared, organized and stored appropriately. You need to collect all your financial documents such as bills, paperwork and emails in an organized manner.
Estimated Tax Payments
Almost all small business owners feel the burden of paying Federal taxes that is certainly one of the major challenges they experience. Although quarterly estimated tax payments are required of businesses, ardent planning can help small business owners manage their business related financial implications. While figuring out the exact amount of quarterly payments for the year, set up a plan to regularly move a part of monthly proceeds to your business account, which is completely dedicated for quarterly tax payment. Also you need to set up an account with the EFTPS. Setting up this account will help you to schedule automated withdrawal of your quarterly taxes from this account.
Block Out A Couple Hours Each Month On Your Calendar
If it is not scheduled in your calendar, most probably it will not get done. However, in case you save only some hours every month to arrange and organize all of your financial paperwork in the folder, you will not have experience the hassle of managing 12 months of paperwork at one time. All the way through this time, you want to adjust your bank and credit card accounts by matching up your receipts with the statements obtained from your bank.
Evaluate Business Finances Before The End Of Year
You need to evaluate all your business finances one month before the end of year to identify the possible opportunities to reduce the tax burden. You can base this on the sales for the year and projected sales for the approaching year.
Split Up Personal And Business Finances
You may have commenced your small business without considering what the future would bring in. However, if your business makes profit, the Internal Revenue Service (IRS) will ask for its share. Like any other business, you probably have used your personal assets in the start for startup capital and probably have used your personal credit score to get a business loan. As your small business grows, splitting your personal and business finances and maintaining a record of both is also important.
Plan Workplace Benefits With Taxes in Mind
Giving your workers a boost might also seem like the most reasonable way to incentivize for a job properly performed — however there are so many other ways to incentivize the employees other than salary alone.
Tax-Related Information From Contractors and Employees
For workers who are on your payroll, you need to deduct some funds for Social Security, Medicare and unemployment from each paycheck. Get signed W9 form and some other tax related documents from independent contractors before the tax season started to make sure you have every bit of information to issue the 1099-MISC forms for the performed services. This only applies when you pay them $600 in a tax year.
Managing small business taxes requires time and financial investments, but with appropriate planning and management you can reduce the burden. Follow these tips for this tax season to reduce the time, hassle and money.