Tax season is upon us and with it brings a substantial amount of stress, particularly for small business owners. If you’re already stressing about tax season, you’re not alone. Finding the documents and information you need to file your taxes can be challenging, especially if you haven’t been keeping up with your files year-round. Tax laws and deductions change yearly, and you have to research the latest information to ensure you file your taxes accurately. Preparing for tax filing alone is challenging enough; actually filing is a completely separate matter.
We’ve provided several tips to ease the burden of tax preparation and ensure that you make the April 15th deadline. Keep the following in mind as you prepare for tax season (and remember to practice your deep breathing):
- Always keep your personal and business expenses separate.
The IRS keeps a close eye on personal expenses that could be claimed as business expenses (such as using a business vehicle for personal reasons). Protect yourself by maintaining separate bank accounts and credit cards for your personal and business expenses. Keep good records to back up your claims. If the IRS does inquire about a particular expense, you will have the information you need to back it up. - Maintain good financial records year-round and research available deductions.
Proper record-keeping is crucial to ensuring that your taxes are filed accurately. Be diligent about maintaining your records all year so when it comes tax time, you have everything you need to file confidently. Make sure to save all essential paperwork that may be needed to back up deduction claims in case of an audit. Remember that tax credits and deductions change each year, so be sure to stay up to date on the latest information. - Take advantage of the tax credits within the Affordable Care Act.
This credit will cover up to 35% of the health premiums you pay to cover your employees. For the 2014 tax year, this credit will cover up to 50%. - Remember the Small Business Jobs Act Tax Provision.
Make sure you utilize the provisions within The Small Business Jobs Act of 2010. There are over 17 tax provisions designed to decrease the tax burdens for small businesses. While it may take some time to determine what you can claim, it’s worth the money you could save your business. - Avoid common small business audit traps.
It’s important for small businesses to know the red flags that capture the IRS’ attention. Classifying employees as independent contractors, claiming a home office deduction, and claiming large sum miscellaneous deductions are all huge red flags. If you do qualify for these deductions (and your employees are independent contractors), don’t hesitate to claim them. Just make sure that you have the evidence to back up your claims.
If your small business could use some helping preparing your taxes, give us a call today. Our team of experienced small business accountants and CPA’s can help you make sense of tax regulations and avoid audit traps. Take a look at our tax planning and preparation services to learn more about the services we can offer businesses just like yours.