Make 2016 Your Best Tax Season Yet
As 2015 comes to a close, tax season is fast approaching. The April deadline is already looming and likely causing you stress, since there’s already so much on your plate. Doing taxes as an individual can be complicated. Doing taxes as a business owner is… very tricky, to say the least. When tax season rolls around, many entrepreneurs find themselves pulling their hair out with stress – but it doesn’t have to be as hard as it seems. Good record-keeping and a little perseverance goes a long way. Here are a few tips to help get you through the 2016 tax season.
Keeping Records the Right Way
Obviously, good record-keeping is a must as a business owner. Aside from just keeping a record of all your expenses, though, you also need to keep records in an organized fashion. Throughout the year, enter records into your accounting software as you create them. Don’t wait until the end of the year to tally your expenses. Make a habit of entering information at the end of each workday or work week. Also, keep your business and personal expenses separate. That means you should have different checking and credit card accounts for yourself and your business. It will make record keeping and tax season a whole lot easier.
Outsourcing your payroll and taxes is another fantastic way to keep proper care of your records and save yourself the headache of doing your own taxes. Many payroll companies offer tax services as part of their packages. Some of them are tax-focused, meaning their main service is accounting and taxes; payroll is a secondary benefit. These companies know the ins and outs of changing tax laws and how to get you the best tax breaks. Otherwise, you may run the risk of making costly mistakes on your taxes.
Know Your Deductions
Like individuals, businesses also have standard deductions they can claim. First-year business can deduct up to $5,000 in capital expenses for launching their company. If you’ve taken classes to improve your career as a business owner, you can deduct those, as well. Furthermore, the Small Business Jobs Act Tax law, enabled in 2010, has plenty of opportunities for small businesses to save money.
Have a Secret Arsenal of Tricks
There are plenty of little loopholes small business owners can use to their advantage. For example, if one of your children works (or helps out) around the company, you can pay him or her up to $6,000 that’s not taxed as your own income. If your spouse works for you, and you pay for healthcare, you can also deduct those payments. There are ways to save with non-related employees, as well. Offering extra benefits, like healthcare and childcare, instead of raises can offset the cost of paying taxes on additional income.
We all know donations can help reduce individual tax payments, but did you know you can leverage this as a business? If you have unused inventory at the end of the year, donate it. You’ll save money since you don’t have to store it, and you’ll get significant tax breaks. Just remember to keep precise records for donations totaling more than $500, as donations more than that amount have more stringent reporting standards.
Contractor in Charge offers various tax and payroll services. Find out how to put your company “In Charge” – schedule a call with us to get a free quote!