The start of a new year for some of us means the promise of growth and prosperity. But for others its means headache, worry, and even regret. Preparing to file your taxes can be a stressful time; especially if you're unprepared.
The most important thing to do when filing your business taxes is to manage your time wisely. Waiting until the last minute to gather important information will only send you into a whirlwind of trouble. No one wants to get down to the wire only to realize that an important deduction that you could have taken advantage of has slipped away from you due to lack of documentation. In order to avoid costly mistakes such as this one, keep yourself prepared year round. Once a month take the time to update your file folders and keep track of important receipts and charges made on your credit cards. It may be hard to be disciplined enough to do this, but it will save you time and money come next April.
You also want to make sure that you are using a reliable tax professional. While it may be enticing to try and save a few dollars by going to a smaller company or an individual that you know, you don't want to make the mistake of sacrificing quality over quantity. One wrong swipe on the keyboard, or an innocent act of overlooking key items could land you in hot water with Uncle Sam and cost you thousands of dollars in misfortune. Make sure that the person you go to for professional help is thorough, accurate, and proactive about staying abreast of new developments and tricks of the trade that may help you.
Filing Status and Deductions
Before you even begin to finalize your tax returns, make sure that your filing status is correct. You may find out later on that the classification of your business is costing you more money than you think. Do your research and contact business mangement professionals that can advise you on how to structure your business for the maximum benefit to you and/or your employees. Once this is established you can also have a more clear picture of what types of deductions are available for you. Things like Continuing Education costs, Vehicle mileage and maintenance, Loss or theft of equipment, and Insurance premiums are just a few items that many leave off their tax returns if they are not using the right professionals to prepare their returns.
6 Small Business Tax Cuts
You may notice that there are a few differences when you file your taxes this year. The Small Business Jobs Act, or SBA is aiming to give business owners better tax breaks and better access to credit. Here are six new tax cuts that may help during this year’s tax season:
1-A new provision eliminates capital gains taxes on small business investments (if held for five years).
2-It increases the amount of investments a business can write off to $500,000. Prior to the act, the expensing limit was $250,000.
3-The act also implemented a 50% “bonus depreciation” through 2010.
4-A new deduction for the cost of health insurance for a business owner and his/her family members.
5-Cell phone usage can be deducted without requiring extra documentation.
6-Start-ups can deduct $10,000 in expenditures (vs. a prior $5,000).
Be sure to have thorough, precise conversations with your accountant about the nature of your business, your past successes and failures, and the direction of your business. This will make the entire preparation and filing process much easier for both of you. Being armed with an arsenal of knowledge is the most important gift you can give to your business for years to come.