Tax time can be stressful for everyone, but it’s particularly challenging for small business owners. Whether the owner is among the 84% of those who hire outside tax help, or they manage their own taxes, it’s an unavoidable part of running a business. Here, owners can get tips to reduce the amount of money and time required to effectively manage taxes.
Account for Estimated Payments
Almost half of those who responded to an NSBA survey said that the burden posed by Federal taxes is one of the most difficult. Though a quarterly estimated payment is required of all business owners, planning can help them manage the financial implications. When determining quarterly payments for the entire year, the owner should set a schedule to consistently transfer money to a business account that’s set aside for the purpose.
Organize Financial Documentation on a Monthly Basis
Business owners should set aside an afternoon once a month to scan receipts for business expenses to be claimed. It may be helpful to create a spreadsheet with each receipt’s details and purpose, and to tally expenses in relation to income. By creating monthly business finance folders and storing information in the cloud, it’s easy to access them from anywhere, and to provide information in the event of an audit.
Review Finances Before the End of the Year
Business owners should review the company’s finances a month before year’s end to find ways to minimize their tax liability. For instance, it may be beneficial to use charitable contributions, equipment purchases and retirement contributions to reduce the year’s tax bill.
Design the Workplace’s Benefits in Consideration of Taxes
Giving raises may seem like a sensible way to reward employees for good performance, but there are other ways to provide financial benefits. If an employer provides fringe benefits such as vision and healthcare and childcare assistance, they can offer financial perks to employees while reducing business tax liability.
Managing taxes requires a financial and time investment for the business owner, but basic organization can reduce the burden. By putting these tips into use, an owner can keep more of his or her hard-earned money—while reducing the suffering of tax season. For more information on maximizing small business success, keep visiting nancy-rubin.com.