Three tax tips for small business owners
Do you dread preparing and submitting your business tax documents each year? A tax expert shares three tips that can help make this easier for you.
Running a small business can mean there’s a lot on your plate at all times. Whether you have a restaurant, cafe or corner store, there’s no doubt you’ve had to become an expert in many things. However, there’s one thing most of us are not experts in – something that can affect your bottom line as a business owner – and that’s taxes.
But don’t fear! With the help of a business tax accountant, business owners can ensure they make the most of their allowed deductions and maximize their profits.
Three tax tips for small business owners
Whether you are completing your annual Self-Assessment for HMRC, or preparing to file with the IRS, here are the top three tax tips small businesses need to keep in mind when doing their taxes this season.
1) Keep up with your bookkeeping
Make sure to monthly update your books on QuickBooks. Part of making doing your taxes easier is to make sure your profits and expenditures are up to date.
Personally, we update our banking records daily; it only takes a few minutes and means we know exactly what is coming in and going out. We’ve also created a free profit and loss sheet for you here (with explainer video). We recommend completing this daily or weekly to get a clear picture of your business finances, make better financial decisions and set realistic goals.
2) Check your estimated taxes quarterly
Run your financial reports quarterly to assess any need for estimated taxes. This will save you from an unexpected tax bill at the end of the year.
We use the Profit First approach to ensure that we are continually putting aside money for taxes and other expenses, so we know we have always got enough to cover our costs and bills.
3) Make sure you’re getting your sales taxes right
Make sure you’re properly computing and remitting sales taxes. This can change based on the state you are doing business in, if you’re in the US.
If you’re in the UK and you are VAT registered, ensure you are charging the correct amount on your sales, and submitting your VAT returns on time. You can check our handy VAT calculator here.
Many small businesses get these three things wrong!
According to small business and tax accountant, Milla Liberson, small businesses can often get these points wrong which puts them in both a bad position with the IRS and their business finances.
With a little bit of knowledge and a few tips small business owners can be better prepared to take on this tax season and take the fear out of doing their taxes.
Author: Milla Liberson, MBA ,EA, is an accountant, licensed tax expert and President of OnPoint Business Services.
