Whether you’re a brand new business owner or you’ve been in business for decades, tax season can be daunting. But, with these three easy-to-implement strategies, you can confidently face that April 15 deadline.
Stay organized
It seems simple, but organization could save you significant time — and money — as you prepare your documentation for tax season. An easy shift in perspective is to change from one (potentially) panic-filled marathon of combining all your receipts. Instead, try setting aside some time every month to organize your receipts. This way, you’ll have everything you need at your fingertips, no last-minute scramble to find a tiny slip of paper from mid-February.
When it comes to receipts, there are several ways you can proceed. If you’re more comfortable with physical copies, keep them organized and in one location. However, there are a variety of scanning and accounting apps available to help keep you organized. You can even scan your receipts on the go and know they’re secure.
Whichever delivery method you choose, skip the shoebox (or grocery bag) full of receipts! Sorting through all of that will result in a lot of wasted time for you or your accountant.
Know Your Deductions
The Internal Revenue Service’s (IRS) rule of thumb is that “ordinary and necessary” costs of doing business are deductible. While some deductions may be obvious, like expenses related to the day-to-day running of your business, including:
- Cost of goods sold,
- Supplies,
- Contractor costs,
- Office rent and utilities,
- Business insurance,
- Advertising, and
- Payroll, etc.
However, other “indirect” costs may also be eligible as deductions. Possible indirect costs include:
- Home office expenses,
- Business mileage on your personal vehicle,
- Contribution to your retirement savings account,
- Interest on your business loan and business credit cards, and
- Start-up costs for your first year of business.
Keeping track of all these expenses can help you maximize all eligible deductions.
Work with an Expert
You don’t have to tackle tax season alone, and working with a qualified tax accountant can ease a lot of the stress. When finding an accountant, select one that understands your business and business goals. A tax accountant who is on the same page with your vision for your business can help you stay up-to-date on the latest tax rules. They can also share guidance and advice about what not to do.
Clients with the West Virginia Small Business Development Center (WV SBDC) have access to subject matter experts (SMEs) in a variety of fields, including accounting. This service is available at no cost to the business owner.
With these three strategies, tax season doesn’t need to be overwhelming. The WV SBDC offers additional resources to help small business owners year-round.