Tips for Small Businesses During Tax Season

Tips for Small Businesses During Tax Season

January 31, 2020

As a business owner, you should constantly have your taxes in the back of your mind, even when tax season feels like it’s a long way off. You should consider the tax implications of any move you make with your business, and take the proper steps to get ahead with your tax preparation so you can get through the process smoothly when tax season arrives.

Here are just a few small business tax tips in Hayward, CA to help your business through this tax season.

Keep track of all transactions

You’re going to make tax preparation a whole lot harder than it needs to be if you fail to properly track all of your transactions throughout the year.

The first step to this is selecting an accounting system or bookkeeping program you’ll use for your business. While you can track your finances with an Excel spreadsheet, we’d generally recommend you use software that is actually designed for this purpose to ensure easier use and greater accuracy. QuickBooks is perhaps the most commonly used tool by owners of small businesses, but you can find other software options on the market as well.

It’s also a good idea to hire someone who can track your books and finances as soon as you’re able to afford it, so you don’t have to be the person who’s managing all of this information yourself. It’s very valuable for your business to have someone on staff who understands accounting and can make your job (and your tax preparer’s job) a whole lot easier.

Once you actually have this system set up and running, it’s important to use it diligently and unwaveringly throughout the entire year. Track all income and expenses as they come in, and regularly reconcile your accounts so you can make sure all transactions have been accounted for.

Quarterly reviews

Get in the habit of performing quarterly reviews of your business financial statements to ensure the accuracy of all of your books, and if there are any discrepancies, go back and resolve them as soon as possible.

If you take the time each quarter to evaluate all of your numbers, including anticipated profits, your business will be able to predict with much greater accuracy what you’ll have to pay in taxes for the year, both federal and state. This will help you to eliminate the potential for late-payment penalties that would otherwise be implemented by the IRS, and gives you time to make decisions before the new year about purchasing more assets, paying out bonuses or contributing to retirement accounts to help lower your tax liability.

Comply with all tax filing requirements

Make sure you comply with all tax filing requirements, particularly related to your payroll, and that all forms and statements are properly filed and issued. Keep up with this throughout the year so you don’t find yourself playing catchup during tax season.

Reach out to Menjivar & Company CPAs, Inc. for more information and additional key small business tax tips in Hayward, CA.

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