Tips For Making Business Taxes Less Confusing

Tips For Making Business Taxes Less Confusing
  • Opening Intro -

    Taxes are confusing enough when April 15th comes around each year, but these governmental charges are even more complex when a business is involved.

    Whether you're an independent consultant or a small-business owner with 10 employees, there are ways to make your business taxes less confusing.

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Take a deeper look at a few tips that can help you save money at the end of the fiscal year.

Examine Tax Implications of Offered Incentives

You may want to attract some top employees to your business so specific benefits are often the best choices. IRAs, 401ks and stock options are common items that potential employees want to see on their benefit list. However, businesses are taxed in different ways when it comes to these various benefits. Before you offer any incentives, read detailed information about how you or the employee is ultimately taxed. Some benefits are more beneficial for the employee compared to the business owner.

Partner With a Professional

Business owners might try to work on their own taxes, but penalties and fees may add up if any sections are incorrect or audited. Consider the help of a tax professional. Many professionals have tools like tax practice management software that can help make sure you can get your taxes done correctly and efficiently.  You can hire them outright or consult with them on a fee-based agreement. These professionals can take an unbiased look at your taxes, and offer you the insider tips that are necessary for any business. Items that you may have overlooked could be incredibly important.

S-Corp to Reduce Self-Employment Taxes — Small Business Tax Tip:

Pay Estimated Taxes On Time

Individual and traditional small businesses will often have estimated taxes required of them throughout the year. These taxes are easy to overlook because most businesses will pay their taxes through withholding banking processes. Make your business taxes less confusing by pre-paying them in quarterly installments. The government won’t penalize you for late tax payments when they’re officially due next year. In fact, you might get some of your taxes back at year-end based on your income and deductions.

Document Charitable Contributions

A business might be generous to local charities, but be wary about reporting every penny given out to these businesses. The IRS wants proof of every donation in the form of a receipt. If you gave money to a charity that has no documentation of the action, that donation doesn’t exist in the eyes of the government. Simply be diligent about asking for a receipt during each transaction. This courtesy also helps the charity keep track of its own income too.

Bonuses are Taxable

As a business owner, you want to treat your employees well with surprise perks during the fiscal year. You might offer a bonus to them at the end of a major project. Although this perk is generous and improves company morale, businesses need to remember that the money is taxable. The business needs to decide if they’ll pay for the taxes out of their funds, or tax the employee as their paycheck would be normally altered. Failing to track the bonuses and subsequent taxes will create problems when tax bills are due.

Home Businesses Beware

Many businesses are simply ran out of owners’ homes. This business convenience can often complicate taxes, however. A home can only be deducted on business taxes when a certain square-footage percentage is dedicated to work only. The remaining square footage is merely real estate for personal income-tax purposes.

Don’t wait until the end of the fiscal year to figure out your taxes. In fact, it’s a smart idea to evaluate your tax status at least once every quarter. You can allocate specific funds for the taxes at these points in order to reduce your overall bill. Taxes must be paid on a regular basis, and they can be organized to streamline your business’s operations.

Business Management reference:

Business Advisory Group

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