Tips to Guarantee a Stress Free Tax Season
Tax season can be a stressful time for the small business owner. It is the beginning of a new fiscal year in most cases and filing business taxes is not something most business owners want to deal with. Most small business owners file their taxes on a Schedule C, which is used for sole proprietors and limited liability companies with only one owner. Due to the widespread abuse of the Schedule C, it is the tax form that is most likely to be audited by the IRS. There are several ways you can prepare for the tax season to ensure that your tax season goes smoothly with a limited amount of stress. Even if the IRS elects to audit your business these tips will leave you prepared and worry free when it comes to filing this tax season.
Report all income when filing your business’s taxes. Even if you do not receive a form 1099 income must be reported. When you are in the business of selling merchandise all sales must be reported. If during the year any discounts or returns took place these can be used to offset the sales reported. If your business performs services all service revenue must be recorded. Even if your business receives money from something that is not a direct result of business activity you must report this income. For example, if your business earns money through a raffle this income must also be reported on the tax return. It is important to include all business income incurred throughout the year.
Keep track of all business records. Keeping track of all business transactions allows for you as a business owner to easily access which business expenses are tax deductible. Records such as invoices, receipt books, credit card sales slips and cancelled checks should all be kept as documentation. Make sure you have some sort of documentation for every expense you claim on your taxes. Keeping records of all business expenses ensures that if the IRS chooses to audit your small business, you will have documentation to back up all deductions taken.
Purchase small business accounting software. Most accounting software that is offered for small businesses includes a feature that automatically calculates business income and expenses for tax purposes. Having some form of accounting software will help you to keep an accurate record of all your business income and expenses.
Following these tips will help your tax season run smoothly. If you choose to use an accountant to perform your small business taxes, being organized will reduce the amount of time it will take them to produce and file your return. The less time it takes them the less money it will cost you. If you choose to file your business’s return yourself, being organized will save you time and the frustration of figuring out all your small business expenses and income for a year. Whether you use an accountant or perform your tax services yourself these tips can help save you time, money and stress!