The way you file and record your taxes could play a role in just how much profit you can make. There are a few tips about how one can file taxes for small businesses while still making a profit. If your recording and filing system is not very accurate and organized, you might just end up paying much more in taxes than you need to pay. The slightest mistake can be quite expensive. This is especially so for small businesses where every single dollar counts.
Do not think that no one can make such mistakes. In an article in Forbes by Garrett Gunderson, he made an astonishing discovery. He discovered that about 93 percent of his customers who owned small businesses were paying more taxes than they needed to. They had been doing that for a good number of years before his survey was carried out.
No one intentionally makes such mistakes, but what if you don’t even know that you are making a mistake? Doing taxes for small businesses is serious business, especially for the business owners. Here are some tips to help you get started.
Properly Documenting Taxes for Small Businesses
Below are a few tips or guidelines which can help you avoid paying more tax than is legally required of you:
1. Make Use of Tax Filing Software: As a small business, you cannot afford to make such expensive mistakes as overpaying taxes. The use of software can help you avoid the needless stress and headaches that come with manually compiling tax information. The chances of the software making mistakes (with the correct values inputted) is little to zero. We recommend using TurboTax, but there are many other options as well. Questions? You can consult with a live agent at H&R Block.
2. Start Paying your Retirement Funds: By paying these, you reduce taxable income. If you pay money into a retirement account, it cannot be taxed until it is withdrawn.
3. Include Your Home Office: If you have an office in your home, you could subtract the expenses related to that home office.
4. Hire a Family Member: If you have a family member or a friend working for you, you can add to your tax saving.
5. Do Not Quickly Sell Off Your Old Equipment: If you have equipment that is no longer useful in the office, do not rush to sell it. Find out how it is classified under Section 1231. If it can be abandoned, this would simply be an ordinary loss. But if not, it can lead to a capital loss if you sell it.
So you see, there are many ways to cut down on overpaying taxes for small businesses to the government. Need more tips? Check out the Pocket Tax Guide for small business owners.