When you run a small business, every penny counts. A 2% discount from a supplier can add up to thousands of dollars in profits over a couple of years, for example. Planning ahead for your taxes can also make a huge difference.
If you get all of your ducks in a row and get organized about your business’ tax situation, you’ll pay considerably less in taxes and have more money to grow your business.
Here are some things you should be doing on a proactive basis to squeeze the most from your tax return:
If you want to get the most from your tax situation, you need to operate your business in such a way as to take the best advantage of tax rules. Talking with your tax professional periodically through the year can save you both money and time when it comes time to file your taxes. Depending on your business this can be as simple as an hour or two of consultation each quarter, or it may require more frequent or more in-depth meetings.
One of the most common frustrations small business owners face is catching up several months’ worth of bookkeeping when it’s time to file your taxes. This sort of practice will not only cause you frustration when it’s time to file, it could be costing you money today.
By keeping on top of your books, you’ll know exactly how your business is faring. You can look at specific business components and know whether they’re profitable or whether there may be room for improvement.
A number of the most popular accounting software packages now allow you to scan documents and attach them to transactions in your accounting system. Even if you’re not willing or able to go that far, you can organize a system of keeping and tracking all of your expenses.
You need to do more than toss all of the receipts you think might be relevant in a shoebox; you need to begin categorizing various expenditures during the year. This will not only greatly reduce your frustration at tax time, but it will also put you in a better position at year-end to maximize tax savings by making certain purchases.