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When it comes to filing taxes, you'll save time and money with a few business tax tips that can keep you organized and ready to take advantage of tax saving opportunities. Many small businesses end up in trouble financially because they fail to account for tax expenses; these tips will help you manage tax expenses and keep them to a minimum.
Tip One: Stay Organized
The time to gather all of your receipts and figure out your deductions isn't the day before your filing is due. At the beginning of your tax year, whether you use a calendar year or a fiscal year, create a folder and put it somewhere handy. Over the course of the year, as you make purchases for your business, pay bills, make charitable donations, and buy office supplies, immediately store the receipts in your folder. When it comes time to file your taxes, you'll have all of your expenses and deductions at your fingertips.
Tip Two: Go Electronic
There are many wonderful software products available to help ease the burden of your business accounting process, which will make filing taxes a snap. Most of these products offer ways to code your expenditures as tax deductible and can be imported into your tax software at the end of the year. Making the switch from paper to electronic in both your daily business accounting and your tax filing will save you time and money.
Tip Three: Take Advantage of Deductions
Do you work from your home? Do you use your car for business, even part of the time? If you have a dedicated work space in your home or use your car for business purposes, there are several deductions you may be eligible to take. A portion of your mortgage, property taxes, insurance, and home improvement costs may be deductible based on the percentage of square footage of your home that is used for business. Mileage and other expenses for your vehicle may also be deducted.
If you meet with clients, travel, or have other business related expenses, those, too may be able to be deducted from your gross income to reduce the amount of taxes you will have to pay. While each situation is unique and you may benefit from speaking to an accountant or tax counselor, keep track of your expenses throughout the year to make it easier when you file.
Tip Four: Pay Quarterly
It can come as quite a shock how much you owe at the end of the year in self employment tax. You can save yourself the heart ache of a big tax bill by setting up quarterly payments. Whether you file under your own social security number or have a separate tax identification number for your business, making quarterly tax payments can not only make it easier to manage your tax debt but prevent you from incurring penalties at the end of the year.
Tip One: Stay Organized
The time to gather all of your receipts and figure out your deductions isn't the day before your filing is due. At the beginning of your tax year, whether you use a calendar year or a fiscal year, create a folder and put it somewhere handy. Over the course of the year, as you make purchases for your business, pay bills, make charitable donations, and buy office supplies, immediately store the receipts in your folder. When it comes time to file your taxes, you'll have all of your expenses and deductions at your fingertips.
Tip Two: Go Electronic
There are many wonderful software products available to help ease the burden of your business accounting process, which will make filing taxes a snap. Most of these products offer ways to code your expenditures as tax deductible and can be imported into your tax software at the end of the year. Making the switch from paper to electronic in both your daily business accounting and your tax filing will save you time and money.
Tip Three: Take Advantage of Deductions
Do you work from your home? Do you use your car for business, even part of the time? If you have a dedicated work space in your home or use your car for business purposes, there are several deductions you may be eligible to take. A portion of your mortgage, property taxes, insurance, and home improvement costs may be deductible based on the percentage of square footage of your home that is used for business. Mileage and other expenses for your vehicle may also be deducted.
If you meet with clients, travel, or have other business related expenses, those, too may be able to be deducted from your gross income to reduce the amount of taxes you will have to pay. While each situation is unique and you may benefit from speaking to an accountant or tax counselor, keep track of your expenses throughout the year to make it easier when you file.
Tip Four: Pay Quarterly
It can come as quite a shock how much you owe at the end of the year in self employment tax. You can save yourself the heart ache of a big tax bill by setting up quarterly payments. Whether you file under your own social security number or have a separate tax identification number for your business, making quarterly tax payments can not only make it easier to manage your tax debt but prevent you from incurring penalties at the end of the year.
