Now is the time when most businesses are wrapping up their fiscal year, and getting the last details done before the start of the next. According to SBA data, more than 79 percent of small businesses have no employees – meaning that a majority of small business owners are doing it all. And when tax season rolls around, it can mean plenty of stress for owners of small businesses. Instead of trying to figure it all out later next year, start now with these tips to make your life easier.
1. Track all allowable expenses, including asset purchases. Under Section 179, small businesses can deduct a majority of their capital purchases for the year those items were purchased. This includes office supplies, software programs, equipment, vehicles and more; it can really add up and deliver a significant reduction in your tax bill.
2. Get the app. There are lots of apps for iPhone and Android that help simplify the data gathering process. Tax Tracker and Receipt Filer let you take and store photos of receipts, which you could do throughout the year, and will help to reduce the time you spend searching for and organizing paper receipts.
3. Stay organized. Make a list of all the expense categories you historically have used and then create file folders for each category. Drop your receipt images into these file folders as you acquire them, and before you know it, you’ve got all your expenses organized and categorized for the tax year.
4. Update your W-9s. You will need to report all your contract employment expenses, so you need to be sure that you have current W-9 forms on file for all your independent contractors.
The SBA also warns small business owners of common audit traps to avoid, including misclassifying employees as contract workers, mixing personal with business expenses, taking a large sum miscellaneous deduction and claiming a home office deduction that does not qualify.
If you’re a small or mid-size business owner, call us at (612) 206-3701 or fill out our contact form today to schedule a business consultation session.
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