For small businesses or startups, tax season can be a stressful time of the year. Even with the help of attorneys or accountants, most large and more established corporations don’t breeze through tax returns completely worry-free.
It isn’t all bad news, though - as a small business owner, or taxpayer in general, you can create a situation where your tax season isn’t so demanding. All it takes is becoming a bit more organized and knowing what to look for when reporting to the IRS.
Here are a few things experts say small businesses should think about throughout the year to be more prepared to file tax returns.
Keep Proper Records
Nothing wastes more time during tax season than having to search through folders of endless receipts and bank statements. There are accounting and tax preparation software available that can organize and guard your financial records - they can even link to various bank accounts.
Make an effort to enter your financial reports as soon as you receive them throughout the year. That way, all your information is conveniently ready come tax season instead of searching and entering a year’s worth of documentation at one time.
Retain Prior Federal Returns
Along with correctly storing records for your current tax year, you can also benefit from keeping a record of past tax returns. Experts state that reviewing prior filings with an accountant or tax professional can help you plan for the future of your business - not to mention having an easier time completing your current year return by knowing what you reported last year.
Categorize Your Employees and Contractors
The IRS and other tax officials carefully look at how your workers are classified. If you violate those categories, it could cost you thousands of dollars in fees and even possible litigation. Make sure your workers who are employees receive their W-2s and freelancers get their 1099s, you can quickly and easily e-file and mail these forms with our sister site, ExpressIRSForms.com.
Deduct Your Home Office or Business Car
Even though there are strict rules from the IRS about claiming a home office deduction, it isn’t impossible or quite difficult - basically, your space needs to be solely for business purposes, and the amount you claim depends on the size of your work space. You can learn more about this tax cut with our helpful, easy-read blog: Home Office Deductions
With vehicles, the IRS understands that cars can shift from personal to business use as quick as shifting gears. You’ll need to keep a detailed account of how many miles you drove each time for business and calculate your deduction from that amount.
There’s far more you can do for your small business to be ready for tax season, so check with your local tax advisor about your options. And even with all this preparation, if you need more time to file, visit us at ExpressExtension.com and e-file the proper tax extension to receive up to six months of extra filing time.
If you have any questions or need help with the e-filing process, give our U.S. - based support team a call at 803.514.5155, Monday through Friday from 9 a.m. to 6 p.m. EST. We also offer email assistance with support@ExpressExtension.com.