Being a small business owner most likely means that you are used to doing everything yourself. While that may be ideal as you expertly run your business, it isn’t when paying taxes. At Bennett CPA we won’t let you take on the complexities of small business taxes on your own. As tax experts, our team of experienced professionals have partnered with small businesses throughout Colorado Springs to alleviate the burden and stress that comes with the planning and paying for taxes.
Filing for taxes is a process that many choose to ignore until tax season. The reason for this is most likely due to the complex nature of taxes that leaves most small business owners feeling intimidated. However, at Bennett CPA we believe that taxes can be made easy when they are broken into small and manageable steps. Try implementing these tips into your small business tax preparation to optimize your finances and avoid unforeseen trouble when paying your taxes.
1. Correctly Classify Your Business
An essential part of paying taxes as a small business owner is to ensure that your business is classified correctly on your tax forms. The type of classification that your business falls under will determine the procedure used to calculate the amount owed for taxes. If incorrectly classified, your business could end up overpaying on taxes which will directly impact on your finances and cause unneeded loss. If you are unsure of how to classify your business, partnering with a tax accountant will allow them to assist you in choosing the proper classification.
2. Choose The Right Accountant
Trusting your business’ financial well-being to another individual is a big decision. Which is why choosing the right accountant to partner with when paying taxes should not be done lightly. When choosing an accountant, it’s important to ensure that they are dedicated to your business’ success not just once a year, but daily. An accountant that's right for you should partner with your business to create a strategic plan that will be implemented throughout the year to ensure that when tax season does come, your business is ready.
3. Accurately Claim and Report Income to IRS
It is essential that your business reports and claims all income to the IRS to ensure that they do not detect any suspicious activity as your taxes are being evaluated. Doing this will lower the risk of your business being audited and will help you avoid having to submit extra tax refunds. The IRS receives the same 1099’s that your business is given which means they can compare your reported income to the amount they know you received. Even if you receive income without a 1099, it’s important to still report it.
4. Keep Detailed Records
Keeping track of your business’ finances is the key to ensuring that every possible deduction is taken advantage of. Tax deductions can significantly lower the amount your business owes on taxes which will alleviate the financial burden that taxes can place on a business. Another reason why keeping detailed records is important is in the unfortunate circumstance of your business being audited. Records will act as proof that your business has accurately reported and paid its taxes.
5. Carry Over Losses
A part of owning a small business is that your first years of operation will most likely leave you at a loss. While the loss of finances is never ideal, there is an upside to those years. Your business can carry over the losses of previous years as a write-off once it receives its first profitable year. This can result in a considerable amount being taken off of your taxes.
6. Start Planning For Taxes Now
While tax season may only be once a year, holding off on your tax prep until March will only result in unneeded stress and avoidable errors. Implementing a year-round strategic plan for your business' taxes will not only ensure that your company doesn’t overpay but will also simplify the process. Try partnering with a professional accountant to create a financial plan for your business so that you can focus on what really matters - the success of your business.
Small Business Taxes | Bennett CPA
At Bennett CPA, we offer a customized solution for your small business taxes. As experts in our field, we understand that every business requires a specialized tax plan that will ensure zero financial waste. We will foster an ongoing partnership with your business that doesn’t end after tax day. From our years of experience, we will cater to your business as we execute a strategic plan that is broken up throughout the year so that you are never burdened with your taxes. Contact us today to get started on your business' taxes, it’s never too early to start.