Last updated on July 18th, 2022
The IRS has announced the start date for tax season as scheduled on Jan. 19, 2016. Tax season is some distance away, but its heat has taken already over the accounting professionals. In coming months, everyone who works in the accounts department for the businesses will be carrying a serious look on the face. They will be digging into all the financial dealings that took place in the last year. Pending payments, paid receipts, income incurred, salary paid, etc. will gain their stern attention and, amid all this, maximum tax saving options need to be explored. Obviously, this is not an easy task to execute.
Giant businesses have a larger staff, better technologies, and ever-available outsourcing option to help their cause. Things are different for small businesses. They usually have limited expense and staff to deal with the eminent taxes. But using these 5 ways, even small businesses can masterly file their taxes:
1. Be Regular With Transaction Tracking
The basic process of tax calculations is listing all the financial transactions that took place in the entire year. If one believes they will be able to collect all the transaction details for an entire year within the last week of tax filing then there is a great chance of filing the tax with the fine for late or wrong filing.
A business has to make a huge number of transactions in a year and tracking them all takes a good amount of time. Adding to it the pressure developed by the waning time limit, things may turn too heavy to handle. Hence, going the ‘famous turtle’ way is best –steady, even if it’s slow. Keep a regular track on the expenses and list them appropriately so that situations are easier later. This practice may even save the expenses of hiring an expert CPA.
2. Make Friends with Tax Software
Software technology has proved to be a great aid for the businesses in almost every department. Tax software have earned heavy appreciations in the recent times from small businesses and there is a good probability that they can do the same for your business. Most of the popular tax software can automate payments and income for the business and cuts down the chances of humanoid errors, such as- redundancy, calculation errors, etc. Keeping it updated matches with the possible tax saving options for different regions.
The introduction of the cloud hosting solutions for tax software further adds to their abilities. Being mobile-friendly, hosted tax software can be accessed from anywhere at any time. Businesses can even use the multi-user collaboration option to ensure that different users are able to work at the same time to streamline the operations. Depending on the services that your business offers, you can additionally integrate the required add-ons more smoothly when working in the cloud.
3. Keep the Financial Documents Well Ordered
Financial transaction documents are more than just a piece of paper and during the tax filing, they are even more precious. Most accounting professionals understand it. Therefore, they keep such documents well organized, especially invoices and payment receipts. It simplifies the taxation hassles to a great extent. As a small business owner, it does not take much to follow this practice.
With the e-bills coming into practice, the maintenance has become automated, but the paper-bills have not left completely. So, some users struggle to handle the mix of e-bills and paper bills, mistakes are committed. Forgetting ghost assets, lack of chronology in transactions, etc. are pretty common in those cases. This is when the ordered maintenance of bills becomes more critical. So, be extra careful this season.
4. Choose Smarter Taxation Benefits
There are possibly endless ways in which small businesses can save the tax payment and the best part is that they are legal. Since most business owners are not accounting masters, they lack the knowledge of tax-benefit choices available. Most of them know that retirement plan and employee insurance can save some amount on taxes, but even then the right calculation is missing. Some even end up totally forgetting about other complicated small business tax exempts. So, there is no damage in hiring a professional tax advisor for picking the best available plans for you.
Guidance from an expert can come in very handy. They might cost some good bucks, but they can save a lot more for your business.
5. Wrap Up Pending Payments Faster
If you have been delaying the payment since long, this is the right time it’s paid. The lure of interest or the laziness with the actions can bite a hole in the pocket. Keeping the dues with you in the tax season will only harm you. This is because profit counts on the difference of the income and expenses. The delays in the payments will make the profit glitter and the payable amount as tax will rise. In the end, the pending payments are inevitable and you will have to pay them as well. It does not sound like a smart business, does it?
Payments made just before the tax filing will cause hindrances with the calculations and might delay the filing. So, it is better to start looking for the available discounts and bargains and make the payments faster. This will allow the calculations for the tax to be initiated on time.
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