Ever since the economic recession hit the world, people have turned to trading for themselves online. And that’s why I’m writing this article for new small business owners.
In this post, I’m going to discuss some vital tax-saving tips for small businesses so you don’t go crazy filing your taxes at the end of the year. So, here are the 5 tips that you would like to remember.
1. Separate your personal and business expenses
Now that you are just a business owner, you have to understand that you are simply spending money for various reasons. Mixing up your personal and business expenses and income can be a nightmare to keep track of. The easiest way to try to do this is to use separate checking accounts and credit cards, one for business and one for personal use.
2. Keep a record of each of your receipts
When you are new to small business taxes, you may not recognize which expenses are tax deductible. When in doubt, keep your receipts in a safe and memorable place so you can ask your tax preparer for his recommendation come the end of the year.
3. Find out for yourself the tax deductible items
If you have a lot of business expenses, you’ll end up with a lot of receipts. Instead of hiding all of them, it would be easier if you knew in advance that the expenses are deductible and then saved only those receipts. There is plenty of free data on this online.
4. He founded a system for fast accounting
McDonald’s didn’t become a great fast food franchise without a system. If you want to stay sane and make filing your taxes as easy as possible, consider setting up a system for preparing your paperwork. Schedule a time each month when you enter invoices into your accounting software.
5. Get a six-month extension on your tax filing deadline
Have you ever seen someone smile as the tax deadline gets closer and closer? I’m sure you don’t need to pull your hair out when the deadline could be a few days away. To make matters worse, that’s the one time of year when tax professionals are the least available to answer your questions. Do you need a simple resolution? If you file IRS Form 4868, you can get an automatic 6-month extension and your NEW tax filing deadline may be October 15, not April 15.
Bottom line, if you understand these basic small business tax tips and apply them, you’ll stay sane while doing all your tax filing.