Tips for a Hassle-Free Tax Filing Season
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If you're stressed about tax season, you aren't alone. The tax filing process is complex and can be daunting for small business owners. While you might be compelled to handle your paperwork and taxes alone, mistakes are likely to be made, and a DIY approach could lead to serious issues down the road. Your best bet is to enlist Lakeside Bookkeeping Services, in addition to taking the following steps to ensure a hassle-free tax filing season.
Ensure your business entity is the best one for tax purposes.
Before tax season arrives, double-check that your business entity is the best option for your tax needs. An LLC, corporation, and sole proprietorship all have different requirements in terms of tax payment and reporting obligations. For example, a sole proprietorship is ideal for a small home-based business, but an LLC may be needed for greater legal protection if your company expands.
Make note of relevant deadlines in advance.
You don't want to miss any IRS filing deadlines for your business. Take the time to research what's due when and make a note in your calendar to start the preparation for filing a few weeks prior to the deadline. Not sure what paperwork you have to submit? The IRS has information about business taxes on their website. You can also consult a professional tax preparer for advice.
Start organizing your paperwork now.
Start gathering and organizing the paperwork you will need to complete your tax filing well in advance. Even if you hire external help, they will need the raw data to work with. Small businesses may need to provide financial statements, capital-asset activity, evidence of business vehicle use, and a summary of any home office expenses (including receipts). You will also need your federal and state tax identification numbers.
Research your tax credit and deduction options.
Taking the time to do research tax credits, rebates, and deductions could save you money. Depending on the size and type of your business, you may qualify for a health care tax credit, for example. You can also deduct certain property, charitable contributions, and pension plan startup costs, among others. There are also possible credits for small business owners. Again, a professional can advise on what you may be eligible for, saving time and stress.
Get tax preparation tools to streamline the process.
Tax filing involves a lot of paperwork, especially if your small business hires employees or independent contractors. Investing in the right technology can streamline paperwork processing. Take 1099 forms, as one example. There have been some important changes recently, so you’ll need to stay on top of them in order to choose between 1099-NEC and 1099-MISC correctly. When you use an online payroll system, you can do your 1099 filing electronically and eliminate the guesswork. Online payroll also makes it easier to pay contractors quickly.
Expect the unexpected.
Even with sufficient preparation, odds are that some surprises will arise during tax filing season — good and bad. Your tax preparer may reveal that you're eligible for a certain credit you didn't know about, for example. Alternatively, you may find that you're missing essential paperwork (like 1099 forms) from some of your independent contractors. This is why it's so important to leave plenty of time for your tax preparation. When surprises arise, you want time to fix them.
Don't let tax season overwhelm you. The above tips can help you get through it easily. If you find yourself struggling, don't hesitate to turn to a professional for help. The investment will be well worth it, as it will save you time, stress, and energy.
Lakeside Bookkeeping Services is prepared to help you with all of your bookkeeping needs, in addition to assisting with backlogs and annual reviews, we also offer business consultation to help make sure your business is on the right track. Reach out today via phone 603-941-0411 or email: Justin@lakesidebookkeepingservices.com.