Since it's April 15th, hopefully most of you have already finished up on your taxes for the year. For those of you who haven’t… better get on that, and quick!
If you found yourself frustrated and struggled to get your taxes done, you are not alone. Most small business owners are stressed by filing taxes, and don’t know how to reduce their anxiety levels. But by planning ahead, and then being mindful of taxes all year round you can be better prepared when it comes time to file. And most tax disasters are traced right back to poor record keeping and poor planning.
Here are 5 tips that will help your small business fare better throughout the tax season:
- Get a tax professional to orient you on your business and taxes, at the beginning of the year. It won’t be free, but the investment is entirely worth it.
- Keep track of your income and your expenses. Don’t be careless with receipts; keep a ledger or use an online expense and income tracking service such as Mint.com, and FreshBooks.com.
- Since you don't work for somebody, you are responsible for paying in the taxes on a yearly (or even quarterly) basis. So establish a fund at the beginning of the year to pay taxes. Put 18% to 22% of your income into it. (See your tax professional about the amount.) DO NOT dip into this fund throughout the year. View it as money already paid and therefore OFF limits.
- Do your research! Investigate what tax breaks are available to you as a small business owner, making sure to ask your tax adviser.
- Meet at least yearly, if not quarterly, to make sure you are on track and see if any adjustments need to be made in the way you are handling your tax planning.
Everyone dreads tax season, and following this advice won’t magically make it your favorite time of year, but it will make it a lot more bearable. Put these suggestions into practice right away, and you’ll find that come next tax season you’ll be a lot more prepared to give the government the share they require.
