Running a business is complicated enough, so you wouldn’t want to face tax issues while you’re at it. Since it’s your responsibility to pay taxes, and you’ll be the one facing consequences if something is awry, it’s important to get it right each financial year.
If you plan to file your tax return online, but you’re worried you might be in over your head, the following simple tax tips should help:
1. Automate Expense Tracking
The good thing about using technology in business is that you eliminate the risk of human error. Recording your expenses can take a lot of your time, so why not make use of personal finance software that’ll do it for you?
Tax authorities don’t just take your word for it when it’s time to talk business expenses, so you need to keep track of every cost if you’re hoping to get a tax write-off.
2. Jot Down Due Dates
Imagine having to pay a tax bill and then being hit with a penalty for not paying it on time. This happens to business owners every year, so it’s important that you note down due dates in your calendar.
If your quarterly estimated tax payment is late, you’ll have to pay interest, and charges will accrue in accordance with your income as well as the extent of your lateness.
Making these payments also helps you get a better picture of your cash flow situation.
With that said, if you expect to owe less than $1,000 in the current year, you shouldn’t worry about quarterly estimated tax payments.
If your refundable and withholding credits are smaller than 90% on your current tax return or less than 100% on next year’s, you’re in the clear in this regard as well.
3. Health Insurance Deductions
If you or any of your family members are part of a medical insurance scheme, you may be eligible for a health insurance deduction.
From dental care to the cost of traveling to a hospital, you can claim deductions for it all. Just make sure you don’t have any health insurance subsidies because that can disqualify you from this deduction.
4. Get Professional Help
You need to structure your business in a way that minimizes the taxes you’re required to pay. You also need to know all the deductions for which your business is eligible.
Figuring all of this out can be a lot of work, so why not hire a tax lawyer to help you out? You can even claim a deduction from seeking that kind of professional assistance for your taxes.
5. Know Your Entitlements
Sometimes, taking clients out for dinner or for a few holes on the golf course may be necessary to close a deal.
Your tax authority may allow you to deduct the costs of entertaining people that bring in more business for you, depending on the nature of the entertainment and what kind of business you’re in.
You may be able to claim car-related expenses if you use it for business purposes, and if there’s a corner in your house that serves as a dedicated home office, this can be a tax-deductible expense too.
6. Outline your Income
It would be wise to have an idea of how much income your business is responsible for and make adjustments each year according to the tax bracket you find yourself in. With more income comes more responsibility, and that translates to a greater need for deductions.
Follow the tips above, seek expert help if you’re still unsure, and you should be just fine this tax season.