Being a small business owner is complex enough, throw in the complexities of accounting and you can easily become overwhelmed like many other entrepreneurs before you. Did you know that on average small business owners will spend 16 hours filing their taxes each and every single year?
Surely there’s something better to do with your time, something that’s a lot more lucrative than dealing with the IRS. However, many small business owners ignore the fact that there are easier solutions (like those that are available at GLG Accounting) which will help them devote their time to what matters the most (growing their business to higher levels of success).
Without further ado, let’s get to the 7 tips that make your entrepreneurial life easier.
Tax Tip #1: First things first, secure your future.
The truth is that we set out as entrepreneurs so that we can achieve our wildest dreams and turn them into reality. There comes a time in any entrepreneur’s life where they want to kick back and relax for a while after spending years building their empire. Once you know this and hold it close to your heart, you’ll be able to start planning for the inevitable.
We’re talking about investing in your retirement of course! Not only is this going to help ensure that your later years are financially sound, but it also provides you with the opportunity to deduct your investments into your IRA from your yearly filing. Planning leads to success, and as entrepreneurs we have to come to accept reality.
Tax Tip #2: A cluttered mess of financial data is useless.
You don’t want piles of paperwork sitting at the edge of your desk or stacked up in the corner, that’s not only an eyesore but it is detrimental (especially for startups and small business owners). That’s why at GLG Accounting, we not only help our clients plan and file their taxes but we’ve taken it a step further with the Xero cloud accounting platform.
What this does is it gives entrepreneurs the financial data they need, when they need it. Reports can be viewed across multiple mobile devices and can be drilled into as deep as needed. Keep all of your receipts and data organized so that when it’s time to file, you’re not running around like a chicken with your head cut off.
Once you have an efficient system in place,
you can experience the advantage that a streamlined accounting system provides.
Tax Tip #3: If you’re just starting up, save money and deduct startup expenses.
Starting a business costs money, and who doesn’t like the opportunity to pay the government even less?
You can actually deduct up to $5,000 per year for R&D (as well as startup) costs. This is for things as simple as the laptops you need to conduct business and as extensive as validating whether the business idea/model is worth pursuing. This is yet another reason it’s critical that you keep your receipts safe and organized, so you can factor this deduction into your tax filing.
Tax Tip #4: Ignore the hype, depreciation isn’t necessarily a bad thing.
Depreciation actually serves as a tax deduction, so it can help you out when you file. There are a couple of options available for this particular deduction. If you need help navigating any of these deductions, don’t hesitate to bring in an expert.
Your first option is to prolong your deduction by taking smaller amounts over a longer period of time. The second option enables you to claim all of your depreciation at once to get a large chunk instead of having to wait out the payments.
Here are some of the things that depreciation can be claimed on.
As you can see, there are numerous opportunities to decrease your tax liability. The key to success when you file each year is to have a proper strategy lined out that’s been reviewed by an experienced accountant. After all, you want to make the most out of your accounting processes, don’t you?
Tax Tip #5: Keep your payroll game right (and legit too)!
For a vast majority of small businesses, this is the reason that they seek out the help of a qualified CPA as there are a lot of details that must be taken into account. First of all, knowing whether you should employ independent contractors or if the law requires you to classify them as an employee while withholding their tax payments is critical. If you don’t have an appropriate setup, you could be facing some steep fines imposed by the Internal Revenue Service.
Also, a lot of the time periodic payments and filings are required in order to ensure that you stay in compliance with all applicable tax regulations. Being late or missing a filing is yet another thing that the IRS looks upon as an opportunity to fine guilty businesses. A professional accountant will ensure all deadlines are met and all of the needed data is at hand, readily available should an audit occur.
Simply put, if you have your payroll game right it won’t be costly or time-consuming. Otherwise you could be spending late night stressing over the numbers and deadlines.
Tax Tip #6: Don’t mix your personal finances with your business.
One mistake that many entrepreneurs make is that they use their personal accounts as business accounts in their earlier days. Sure, a business isn’t guaranteed to work but you don’t have to go about it this way folks. Keep it organized and you’ll find simplicity.
You have to be able to pinpoint every cent of revenue and dollar in expenses. Failure to do so not only provides an inaccurate forecast, but it could also lead to members becoming personally responsible for taxes imposed upon certain expenses.
Take the time out of your day to head down to your favorite bank and startup your business checking (and savings) account. Then only use it for the business itself, and nothing personal for any member of the company.
Tax Tip # 7: Embrace the knowledge of others, your time is precious.
You didn’t become an entrepreneur by wasting your time. We have to make sure our time is spent wisely to ensure that we have the most efficient process possible while producing the best results. The best way to do this is to bring in the army for tedious tasks like this that are critical to the operations of your business.
GLG Accounting is a full-service CPA firm that helps small businesses file (and plan if needed) taxes every year. We handle everything from annual filings to complete accounting solutions. If you’re ready to partner with one of the best accounting firms in the world, look no further…
AND THAT’S THE BOTTOM LINE!
GLG Accounting beats ANYONE’S RATES on filing your taxes, under any circumstance.