Oh, the freedom that comes with being self-employed or owning a small business — except when it comes to tax time, and then that dream of being your own boss, often turns into a nightmare!
But, it doesn’t have to be that way, if you just follow some of these simple tax tips for getting and staying organized!
Don’t get personal – It is imperative that you keep a hard line between “business” and “personal” expenses. Make sure you have separate bank accounts and separate credit cards for personal and business purposes. Keep a log book or journal to document your mileage and other routine “business expenses” such as meals.
Technology is your friend – There are many aps and accounting programs, such as QuickBooks, that can make your life as a small business owner or entrepreneur so much easier.
The early bird – In tax terms, the early bird does get the worm! The earlier you start getting your tax documents together the better. This way it does not become an overwhelming task to get everything together at the last minute.
Be aware of deadlines – You need to know what you need to file, and when!
Stay up to date – There could be significant tax changes implemented by the current administration. It is important to stay current and informed.
Entity Selection – Is your choice of business entity the best from a tax standpoint? Are you better off as a sole-proprietorship, or is the election of an S-corporation a better choice?
Deductions and more deductions – Real estate agents are fond of saying “location, location, location.” CPAs say “deduction, deduction deduction!” Make sure you are taking advantage of every legitimate deduction you can think of. Include business gifts, meals and entertainment, home office deductions, phone, vehicle expenses for business use, equipment purchases, home internet cost, education, periodicals, and interest expense on business credit cards.
Retirement accounts – Consider contributing to a retirement plan such as SEP IRAs, Simple IRAs, or a Solo 401k. Plan for monthly contributions to make it more manageable.
How MBAF Can Help
We understand that entrepreneurs have a “go it alone” kind of spirit, and these tips can help you do so. However, it is never too soon, or too late to get started with a good accountant who knows the intricacies of maximizing your income, while minimizing tax obligations for small businesses.
Compliance with and understanding tax laws can be complex, particularly for smaller enterprises. If you would like to benefit from our expertise in these areas, or if you have further questions on this Advisory, do not hesitate to contact our Tax and Accounting Specialists, or call us at 1-800-239-1474.