Tax season may seem like a distant far-off event, but it’s never too soon to evaluate your tax situation. If you’re filing as a business owner, small tax preparation mistakes can lead to headaches in April. To help prevent this, we’ve put together a list of 4 tax tips for your small business.
Track Your Expenses; Even The Little Things
If you’ve spent money on small things to improve your business, make sure to keep tabs on those expenses. Things like education classes, small office supplies, and online subscriptions can add up over time.
These expenses often go unnoticed and may not get accounted for during tax season. Be sure to consult your tax adviser to find out what small expense deductions you may be missing
Pay Attention To Payroll
Payroll intricacies are often neglected by many small business owners. Failing to keep proper records, incorrectly classifying employees, and losing track of reimbursements are just some of the problems small businesses run into.
These problems can be costly for owners. Not only in lost time, but potential penalties from the IRS. We offer payroll services to help business owners keep track of their employees and maintain accurate payroll.
Remember Vehicle & Driving Deductions
A frequent question we get asked is what driving deductions can I make. If you travel from your place of work to a vendor or customer location it can be considered business driving; and can be deducted. Traveling between your place of work and home is a bit different. Most of the time, this is considered a personal expense, and is non-deductible.
Don’t forget to save other car related expenses. If they can be proven as a business expense, things like insurance and oil changes can be deducted.
Don't Go Wild With Deductions
As a small business owner, you know that every dollar counts. The money spent on business expenses can add up quickly, and owners are always looking for a way to deduct as much of that expense as possible. This can lead to exaggerating on deductions.
The IRS can compare your expenses from year to year and investigate any major discrepancy. Exaggerating deductions increases your chances of being audited. Your best course of action is to consult with a tax professional and see what deductions you are entitled to.
Running a small business isn’t easy. Managing all the background activities while trying to grow the business means mistakes are made and some things fall through the cracks. Hopefully these tax tips will benefit you as your business continues to grow. Consider consulting with a tax professional for more helpful advice. Executive Resources: FSI offers tax preparation services to businesses and would love the opportunity to talk with you about how we can help your small business.