|Small Business Tax Tips
Small business owners encounter complex tax issues
for business and personal taxes. When tax time rolls around most
not prepared. These helpful small business tax tips will ease the
pain of small business taxes.
(1) Pay what you owe,
when you owe it
For every conscientious
tax-paying entrepreneur there is another one who thinks he can put
off paying his taxes indefinitely. This is especially true in small
businesses that are experiencing a period of limited cash flow.
However, there is no escaping the IRS. They will catch up with you,
and when they do taxpayers will be required to pay the full amount you owe
plus interest plus a penalty fee. You are better off trying to pay
your taxes when they are due, even if it means negotiating a
different repayment schedule with your other creditors.
(2) Be proactive about
year-end tax planning
Even though you cannot avoid
paying taxes, there are a number of things you can legally do to
reduce your tax liability. This is especially true as you approach
your year-end tax deadline. Some of the most common things you can
do at year-end include:
- Deferring income
- Paying bills early
- Buying supplies and equipment
- Investing in a retirement plan
(3) Keep up-to-date
There’s nothing worse than
sorting through a shoebox full of receipts to patch together your
company’s tax information. Keeping your company’s financial records
organized and current makes your life a lot easier when tax season
rolls around. More importantly, it lessens the chance that you will
miss legitimate expenses due to lost receipts. Remember, every
dollar of documented expenses translates into one less dollar of
(4) Hire a
professional to prepare your tax return
Paying for professional tax
preparation on top of your tax bill feels like pouring lemon juice
on a paper cut. But the pennies you save in doing your own income
tax preparation can cost you big money.
Professional tax preparers
specialize in helping small businesses minimize their tax liability.
No matter how good your intentions, as a business owner you simply
do not have the time to stay current on the ever-changing list of
tax regulations that tax preparers deal with on a daily basis.
Although there are many tasks you can do yourself, tax preparation
is one area where it pays to leave it to the pros.
Individual Tax Tips
Filing an Extension
If you can't meet the April 15 deadline to file your
tax return, you can get an automatic six-month extension of time to
file from the IRS. The extension will give you extra time to get the
paperwork into the IRS, but it does not extend the time you have to
pay any tax due.
You must make an accurate estimate of any tax due when you request
an extension. You may also send a payment for the expected balance
due, but this is not required to obtain the extension.
To get the automatic extension, file Form 4868, Application for
Extension of Time to File U.S. Individual Income Tax Return, with
the IRS by the April 15 deadline, or make an extension-related