As if paying your own taxes wasn’t enough, tax season for business owners can often feel nightmarish, and if they’ve got any expenses/income they failed to account for, they can be in a world of trouble.
Even if everything is in order, you’re in for an entire week’s worth of stress, and that’s if you’re lucky.
Thankfully, some have already cracked the code when it comes to tax season, and certain strategies have been created to make it easier for first-time entrepreneurs to navigate through tax season without too many worries.
We’ve compiled a number of tips from financial experts to help you learn more about tax season and the many things you can incorporate into your business plan in order to keep everything in check.
Keep reading and do yourself and your business a favor by learning to get the most out of tax season while minimizing your losses.
While it may seem like a given, you’d be surprised by how many business owners don’t do reviews every 3 months, and in fact, some of them only do reviews once a year.
This can lead to a number of complications, as it’s difficult to account for every single dollar spent and gained in a one-year period, which is exactly why you should split your work into even sections.
Go over all your profits and losses in a single quarter, preferably with another person, as a second opinion can change a lot and help you fill in the blanks you may not have noticed.
Ideally, you’ll want to hire an accounting professional who will lead you through the process every step of the way and possibly even teach you a thing or two about managing your taxes and what you can do to always remain on top of your money.
Buy some extra time
Even if you may not need it, filing for an extension can give you more than enough time to prepare your taxes ahead of tax season.
By having some leeway, your accountant will have extra time for errors and may be able to repair them if spotted before filing your taxes.
An extension can save you thousands of dollars in a single year, as it’s bound for things to go wrong at least once.
Murphy’s law dictates that when there’s a variable that can go wrong at any time, it most likely is going to go off at the worst time possible, and you want to be prepared in case it does.
Get the correct tax treatment before the end of the year and you’ll be sparing yourself the many penalties and tax liabilities that come with the smallest of mistakes on your tax sheet.
Leave it to a professional
Running a business on your own is already difficult enough, and despite having some knowledge of taxes, it may be for the best to leave this work to the professionals in the field.
Knowing a bit isn’t the same as knowing everything, and leaving your money in the hands of a pro is much safer than trying to do things yourself.
There’s nothing forcing you to put such a great burden on your shoulders and risk losing thousands when you can pay a professional to do it for you, while also paying them far less than your losses would be in the case of tax liabilities and penalties that come with a faulty tax filing.
As a business owner, your job is to know where every single dollar in your company is at all times, but you shouldn’t be the one crunching the numbers to get to that information.
Separate your personal and business expenses
These days, it’s not uncommon for business owners to have a separate account for their own finances and their business.
In fact, it’s preferred, as business accounts make it easier for you to keep track of employee payrolls and all the revenue your business generates without having to worry about your own expenses getting in the way.
By separating your private life from work, you can ensure that every dollar spent on your own needs isn’t listed as a business expense, and vice versa, sparing you some serious confusion when tax season rolls around.
This also makes it easier to file your own taxes, as you’ll be filing separately from your business, and having a firm grasp on all your money is an advantage that you’ll want to have at any given time.
Tax season is tricky, and calculating taxes on your own is difficult work, especially if you’re new to the industry and haven’t ever done it before.
In these situations, it may be for the best to leave this work to a professional, preferably one you’ve worked with before, as it’ll guarantee that the service you’re getting is of the highest quality and that your taxes will be filed properly.