There are more than 31.7 million small businesses worldwide that operate and, at some point, will need to complete their business taxes. As small business owners, you must know some tried and true tips that will make the tax season easier for you and your company.
Get ready for some small business financial tips below.
Hire an Accountant
Having an accountant is essential when you’re doing business because they specialize in small business accounting. Accountants can offer financial advice and ensure you have the funds you need to cover the taxes your business owes at the end of the year.
Another reason to have an accountant is that they can help you organize your finances and monitor your cash flow to ensure it remains within the green throughout the year.
Keep Accurate Records
Being in business is about keeping organized and accurate records. When you’re not organized, it makes it challenging to find the information you need when an audit is being performed or if you’re attempting to track past spending habits.
Another reason it’s essential to keep records is because, without them, you could be missing out on deductions that can reduce your overall tax bill. It’s essential to invest in a quality software program that will track the incoming and outgoing cash.
Using the right software could reduce the amount of errors staff might make when inputting information into a computer or keeping financial records.
Keep Business and Personal Expenses Separate
When it comes to tax advice for small businesses, initially, it might seem like a good idea to keep your business and personal expenses in one account. But this isn’t the case. It’s essential to keep things separate to ensure you can keep accurate records.
Another reason to separate your business and personal finances is so you don’t make the mistake of spending business funds. This can happen under the assumption that it’s a part of your personal funds.
Another reason to keep them separate is for IRS audits. When the IRS performs an audit of your business and finds personal finances mixed in, it could cause you to be audited more often.
Therefore, do yourself a favor and open a separate bank account and get a credit card for business use only.
Classify Your Business Properly
There are several business structures your company might fall under. It’s essential that you choose the right structure because each comes with its own pros and cons and can help you make the most of your tax deductions.
Whether you’ve chosen an LLC or sole proprietorship, you need to take your time to choose the right structure.
Small Business Owners and Tax Tips That Matter
As small business owners, there are a number of tax tips that will help you make the most of every tax season. Don’t forget to classify your business correctly and keep all business and personal expenses separate.
Are you in need of tax preparation help? Contact Pacific Tax and Financial Group today.