5 Small Business Tax Preparation Tips

Small business tax preparation can be a daunting task, especially if you don’t have a capable Miami tax accountant to help you get your affairs in order. This is especially critical, because many small businesses either do not file their taxes on time or do not make estimated tax payments in a timely manner, which can increase the cost of taxes significantly due to penalties and interest.

 Other than finding expert help, is there anything you can do to make things easier and prevent costly mistakes? Here are some things you can do to make tax preparation a little less intimidating.

How to Take the Stress Out of Small Business Tax Preparation

If you’ve been preparing your business taxes for some time now, you know how confusing and grueling it can be. But did you know that you can make it a lot easier? Here are some valuable tips from a reputable Miami tax accountant that may help ease the job.

Try to be more organized.

You’ll have a harder time preparing your business taxes if your company ledgers and bank accounts are a mess, so start getting organized. Keep in mind that tax preparation is a continuous process, not a one-shot deal, so you need to commit to working on it throughout the year. Here are some ideas to help you get started.

Keep track of all business expenses. You can’t write something off if you have no proof of your spending, so save your receipts or digitize them using an appropriate app. Take note that you can deduct all ordinary and necessary business expenses from your taxes.

As such, the cost of office supplies and equipment, utilities, business license, regulatory fees, legal and accounting fees, insurance, ordinary repairs and maintenance, advertising, employee benefit programs, and qualified retirement plans can all be deducted from your annual taxes.

You can likewise deduct 50% of your entertainment expenses from your taxes – provided it’s related to your business. Just make sure you note all the necessary details, including the names and business relationships of the people you entertained, and the date, place, and purpose of the event.

Start-up business expenses (up to $10,000) and the cost of maintaining a home office (provided the room or space is used exclusively for business purposes) can also be tax-deductible.

Keep a detailed log of all your travel-related expenses. Car and truck expenses can be tax-deductible if you have a record proving that the vehicle is used for business purposes. You can likewise deduct the cost of out-of-town business travels if you meet the substantiation requirements specified in IRS publication 163.

Avoid co-mingling your personal and business accounts. Keep personal and business accounts separate at all times. Avoid using your personal account to pay for business-related expenses (and vice versa) no matter how small the amount may be, since they can easily add up over time. Overlooking these seemingly small things is like throwing good money down the drain, since it can make you lose out on significant tax deductions.

Be more tech-savvy.

Technology can be one of your best friends when it comes to preparing your business taxes, so do some research to find tax preparation software that best fits your needs. However, please be advised that you cannot expect any accounting software to automatically adapt to the unique complexities of your business, so you still need to make some manual adjustments to make it work.

One particular item that baffles many new small business owners is depreciation. While the IRS’ depreciation tables determine which business assets can be depreciated and how much should be deducted per year for certain assets, it can still be confusing for some business owners.

Review and balance.

Instead of just balancing your sheets before the year ends, expert Miami tax accountants recommend doing it more often so you can catch errors and make the necessary adjustments to ensure the profitability of the business.

Pay off your bills. If you don’t, it may look like you have more money than you actually do – which can mean you’ll pay more taxes than you should.

Send invoices on time. Round up all your collectibles so you won’t start the year in a deficit. Write off any uncollectable account to reduce your tax liability. Likewise, you should review the market value of raw and finished inventory. Write down obsolete and unusable inventory to scrap value to further reduce your tax liability.

Look for potential tax credits.

Small businesses can be eligible for several tax credits. For example, you can take the alternative motor vehicle credit if you purchased an alternative fuel source vehicle, or the disabled access credit if you incurred expenses for providing access for people with disabilities. You may also accrue $9,000 in savings over two years if you hire employees who experience barriers to employment.

You can also claim the employer-provided child-care credit of up to 150,000 per year if you pay for the child-care expenses for your employees, or earn a credit amounting to $500 for offsetting the costs of starting a pension plan.

Outsource to the pros.

While there is no question that you can do the job once you learn the ropes, outsourcing your small business tax preparation tasks to a professional Miami tax accountant may still be the best move. By hiring a professional accounting expert, you can ensure your company’s compliance to local, state, and federal accounting regulations and tax standards while maintaining optimum operational efficiency.

Moreover, outsourcing your tax preparation needs allows for significant cost savings. If you have an internal accounting team, you have to pay for their wages, salaries, and benefits. You can do away with all these by outsourcing the work, paying only for the services you need. 

Small Business Tax Preparation Made Easy with BackOffice Solutions

Tax preparation can be a very delicate affair. Afraid you’ll mess things up? Don’t worry. We’re here for you. Contact BackOffice Solutions today for a free quote and let us handle all your tax prep and accounting needs. With over 30 years of experience, we have helped countless businesses gain competitive advantage by providing unsurpassed financial insight, administrative support, and technical knowledge. Let us help you the way we helped countless others.