You’re running your own small business. That means you’re the CEO, controller, and administrative assistant—all in one.
Obviously, that’s a lot of work, but you somehow manage it all. That is, until the end of the year when tax time hits and, all of a sudden, working for somebody else doesn’t seem so bad.
It doesn’t have to be that way. Keep reading for tips on keeping tax time under control—and on keeping them low.
Maintain Good Records
If you’re not keeping good records during the year, it’s going to be chaos at the end of the year. Anticipate what you’re going to need when tax time comes.
If you work with an accountant, for example, you’ll know exactly what you’ll need to give him or her after your first year of going through the process. Don’t reinvent the wheel every year.
The same goes for those who use Quick Books—or any other accounting system. Take note of what you need and keep the necessary records as you go.
Spend a Few Hours a Month Getting Organized
Make sure you’re recording your income and expenses properly. Address your receipts and any lingering paperwork. If you have employees, make sure you have procedures in place for how they’re supposed to record transactions so that you’re not caught scrambling at the end of every year.
Every person deals with tax prep differently. The bottom line is that you know what needs to be done for your business.
Take Deductions When You Can
This requires more paperwork, but you’re throwing money away if you’re not capitalizing on all of your possible deductions? If you use your house for your office, that’s a possibility. Use of your car is another example. How about cell phones or your computer? Don’t forget about office supplies and any books, magazines or online subscriptions you use to stay informed. Of course, you can also deduct any business-related meals.
Use Independent Contractors Instead of Employees
By hiring an independent contractor, you’ll save both on payroll taxes and on benefits. You also won’t be required to pay family leave, overtime, or give vacation time. Lastly, you’ll save on office space, computers, and phone bills.
Keep up with Estimated Quarterly Taxes
If you used to work for somebody else, your taxes were automatically withheld. Now that you run your own business, that’s not the way things work anymore. Make sure you’re prepared, if necessary, to pay your quarterly taxes. The last thing any small business needs is to be hit with interest and penalties.
How Long to Store Tax Records
The Internal Revenue Service recommends keeping records for a minimum of three years.
That doesn’t mean, however, that you should toss everything after that. The IRS recommends keeping all of your records until you are sure that you won’t need them for any other purposes. Your insurance company or creditors, for example, may require you to keep records longer.
The bottom line? When in doubt, don’t throw it out.
Self Storage for Tax Records
Taxes are a fact of life—and not a whole lot of fun. But the absolute worst thing you can do is to get rid of financial records that you may still need.
At the same time, those boxes add up quickly. If you find that your business is running out of storage room, it might be time to look into the benefits of self storage.