Helpful hints for business owners to lessen the stress of filing taxes.
With the deadline to file taxes fast approaching, we asked one of our Business Advisory Services Consultants, Phylicia Moye, to share some tax tips for small business owners.
Throughout the year, I help our loan clients navigate tough decisions and work with them to get their books in order so that at any moment, they’ll know how their business is performing. Getting organized and reviewing your accounting each month is a great way to ensure that tax season doesn’t have to be a stressful time.
Whether you’ve already filed or are still gathering documents, I’ve outlined a few pointers to keep in mind when preparing for the tax deadline on Tuesday, April 17.
Six tips when filing taxes for your small business:
1. Organization is key.
Be sure to organize receipts and all important documentation collected throughout the year to prepare for tax season. The IRS offers guidance on the types of supporting business documents you should keep. Here is a helpful article from the IRS on the kinds of records you need to keep if you’re self-employed.
Keeping things organized will help ease the anxiety of preparing your annual taxes, plus your Accountant will be happy, too!
2. Be ethical.
Make sure that you report all income and (only) business expenses. Don’t mix personal expenses with business expenses.
You should treat your business account as if you are an employee working for a company.
An employee in a traditional work environment would not pay for non-business related expenses (family vacations, personal bills, etc.) from the company bank account. Do right by yourself and respect the integrity of your business funds!
3. Partner with a trusted tax accountant to prepare your tax return.
Tax Accountants keep up with the ever-changing tax code and can advise you on best practices. Check out this helpful U.S. News article for tips on how to find a good tax accountant
Mistakes on tax returns could cost thousands of dollars in penalties and interest to fix, and the IRS does not accept ignorance of tax law as an excuse for mistakes. Nobody wants to receive the dreaded tax notice from the IRS, so save yourself the risk and find a good accountant to help you with your taxes.
4. Leverage accounting software to organize expenses.
Use accounting software to organize and track business expenses throughout the year. (i.e. QuickBooks, Xero, Freshbooks, Wave Financial), and be sure to let these systems work for you by setting them up properly on the front-end.
Need help getting your accounting system set up correctly and guidance understanding the terminology? Through Pathway WBC, we offer 7 weeks of training on navigating business financials, projects, cash flow analysis (plus a whole lot more)! Read about our Embark Cohort to learn more.
5. Don’t forget about state and local filing requirements
Be sure you file your annual report with the Secretary of State – your status with the Secretary of State is one of the first things any investor will ask for, so don’t skip this step.
Be sure to pay any annual state and local taxes on time to avoid, penalties, interest and or dissolution of your business entity. You should have all tax deadlines on your calendar, and schedule out any key steps throughout the year to help you stay on track.
6. Plan ahead
If you weren’t as organized this year, consider making changes for next year. Discuss the recent tax code changes with your accountant. Ask questions and discuss how these changes will impact you and your business.
Tax advisors will help you plan for the future and develop tax saving strategies to protect and build wealth.
Need help with your business? Pathway Lending and Pathway WBC can help!
Learn more about the classroom education and mentoring programs we offer for small business owners on the Pathway WBC website. There you’ll find upcoming workshops, details on cohort levels, and more about our in-depth mentoring program.
As always, Pathway Lending loan clients receive hand-on support throughout the year from our team of business advisors. If you’re looking to start or grow your business but need funding, learn more about the types of financing we offer in our loan catalog.
Phylicia Moye, CPA
Business Advisory Services Consultant