Happy New Year! Now, Start Thinking About Taxes
A new year is upon us! And it's not surprising that many people, including small business owners, welcome this moment to catch their breath. The holiday season does tend to be the most stressful period of the year, both professionally and personally, despite our typical reluctance to admit as much.
We get it. Everybody needs a break. And while the holidays may seem like just such a time, the reality is that for many people, they've been operating at full capacity for both their jobs and their family lives these past two months.
We certainly don't intend to tell anyone not to take a moment to recuperate. Rest up and come back stronger.
But there are little things, important little things, that can be done in the not-quite down-time that many of us are so eagerly awaiting. One such thing is tax preparation.
It's hardly a glamorous topic, and surely won't set many people ablaze with excitement. But it's important for your business and the sooner you get started, the better. A dollar saved is a dollar earned. And there is plenty of money to be saved by thoughtfully considering taxes before it's time to file.
Whenever you make any purchases for your business, make sure to save the receipts! Regardless of whether you're buying equipment, software, or even office furniture, detailed records that include the purchase price and date are essential to substantiate your claims on your eventual tax return.
Any company donation, whether money or property, is a deductible expense. This includes bonuses to your employees and partners, so make sure you've kept company records up to date.
Is Your Business Personal?
For a home-based small business, you may be able to deduct mortgage interest, insurance, and utilities based on your business's use of your home.
Some companies will be able to deduct actual expenses for business-related usage of a personal vehicle, and possibly even reimburse employees for business use of their personal vehicles. Actual expenses in this case include costs of fuel and maintenance, as well as parking.
Again, the bottom line is that you have to keep good records! For vehicles, you'll want detailed mileage records including the date and purpose of the trip.
If the idea of all this record keeping, and ultimately self-filing your business's taxes seems overly complicated, you're in the same boat as most small business owners.
If you have a very straightforward return with no deductions, it's probably not too complex to handle yourself, but this just isn't the case for most people that are running a successful business. That's where it pays to have a tax preparer in your corner - preferably before you desperately need one.
You'll make your tax preparer's job much easier, and you'll probably find better results, if you got some preliminary work done. The old comic standard of a shoebox full of receipts dumped onto an accountant's desk won't cut it in today's world.
You'll want things like W-2s, 1099s, or Schedule K-1s ready to go when you meet with a tax preparer. And of course your company's income statement and balance sheet, as well as the big ticket receipts for fixed assets.
You Can't Do Everything
At the end of the day, if you own a successful business, then your own time should be too valuable to you to slog through a self-filed tax return. Such a return would likely be complicated enough to warrant a professional, as well.
So coming back around to that break we all want: no, now is not the time for you to go out and become the tax master that solves all of your business's tax related dilemmas.
But it's a great time to find a professional who can help you get ahead of the game before the deadline approaches. They'll tell you what they need from you and help you get set up so that they can prepare your taxes as expertly as possible.
In the end, you won't have to spend too much time thinking about your taxes. You've got better things to focus on. But you've got to concern yourself with taxes enough that you go out and find the professional who will spend time thinking about them.
That's about as much of a break as you're going to get.