Filing taxes for the first time as a small business owner can feel overwhelming. But the good news is that you don’t need to figure everything out on your own.
Partnering with a small business accountant can be an incredibly advantageous asset for small business owners seeking to better understand and improve their finances. These professionals possess extensive knowledge and experience in handling accounting tasks, tax obligations, and financial planning specifically tailored to the needs of small businesses.
But whether or not you plan on hiring a small business accountant to help you with your taxes, what should you know as a new filer? Here are three tips to help you meet your tax obligations while maximizing profits.
1. Understand Your Tax Obligations
Understanding your tax obligations is essential to guarantee compliance with tax laws and avoid potential ramifications.
So how can you understand your responsibilities when it comes to small business taxes?
Know Which Forms You Need
Identify the forms applicable to your business entity and ensure all relevant documents are included when filing taxes. The forms you need to file will depend on your business entity, whether you have employees or contractors working for you, if you incurred any losses, and other factors.
Check the Due Dates
Make note of any relevant due dates so you don’t incur a penalty or fine for failing to meet them. Small businesses are required to submit their federal tax return by April 15th. However, other deadlines could be applicable depending on your situation. Consulting with an accountant can help you understand which dates apply to you and what needs to be done by when.
Track Costs and Deductions
Knowing which deductions and credits are available to help reduce taxable income can save money come tax time—and potentially even lead to refunds. Some common deductions include:
- Expenses related to employee wages
- Travel costs associated with running a business
- Interest payments made on loans taken out specifically for business operations
- Cost for rent and utilities if you have a physical office space
Working with a small business accountant can help you understand all your deductions so you can maximize potential savings and avoid any fines or penalties.
Key Takeaway: Filing taxes for a small business can be complicated, so understanding all necessary forms and their due dates is essential. Furthermore, taking advantage of deductions and credits available may result in significant savings—so consulting with an experienced CPA is highly recommended.
2. Utilize Professional Services
A professional accountant can simplify the process of filing taxes for small business owners, making it easier to stay on top of their financial obligations. But how?
A professional tax preparer:
- Understands changing tax laws and how they apply to your business. They have the knowledge to help you understand your obligations as well as which forms must be completed and filed on time.
- Can advise how best to structure your finances for maximum benefits when filing taxes. For example, they can advise whether it would be better to pay yourself a salary versus taking dividends from profits or whether there are other ways to reduce your overall liability depending on your circumstances.
- Knows what information the IRS requires. Documents you may need for filing include income statements, receipts, invoices, and records of estimated tax payments. An accountant will ensure nothing gets overlooked.
- Will help you keep proper documentation. A small business accountant will ensure everything is documented properly should there ever be an audit by the IRS so you have all necessary paperwork ready.
Utilizing professional services is an essential part of successfully managing your small business taxes for maximum profits.
Key Takeaway: A small business accountant can provide invaluable assistance to small business owners when filing taxes. By understanding how tax law changes apply to your business and how to best structure your finances, an accountant can help maximize deductions while ensuring all forms are filled out correctly and filed on time, thus saving time and money come tax season.
3. Stay Up-to-Date on Changes
Tax laws change every year, making it more challenging for small business owners to stay current on changes.
Yet, understanding these changes is important because it can affect how you file your taxes, or which forms are due when. So staying informed will help you comply with tax laws and avoid penalties for noncompliance.
But how can you stay informed of changes to tax laws that may affect your small business?
- Utilize the IRS website for resources and announcements on changes.
- Subscribe to newsletters from reputable publications related to taxation.
- Consult with a qualified accountant who specializes in small business taxes for advice on how recent changes may impact your organization.
- Attend seminars and conferences about taxation topics to help you network with industry experts and gain valuable insight from their experience.
It can certainly be challenging and time-consuming to stay current on changes to tax regulations, so working with a small business accountant can help you better understand the changes while complying with tax law.
Take the Headache Out of Tax Time
Having a professional small business accountant to help you meet your tax obligations and stay current on any tax law changes can make filing taxes for the first time as a small business owner less intimidating.
Let Scharf Pera & Co., PLLC help you with your small business accounting needs and take the headache out of tax time. Our experienced tax professionals will provide comprehensive and reliable solutions for all your filing requirements.