Tax time happens every year. Make sure you’re getting all your deductions and paying your taxes correctly with few simple tips that could save your business in the long run.
1. Document Your Transactions
Keep thorough records of all your deductions and transactions. Save your receipts. The biggest mistake a business can make come tax time is to skimp on record keeping. Make sure you have proof to backup those business dinners you expensed six months ago. Keeping your financials electronically can help too—especially if you use tax software every year.
2. Take a Look at Your Tax Return
If you pay someone to file your taxes for you, don’t forgo looking over your final return. A lot of businesses claim that they pay good money to have someone do their taxes. Why would they want to spend extra time looking over an accountant’s work? Accountants make mistakes. If your accountant has transposed a number or made a mistake, you’ll be the one paying the penalties.
3. Know Your Workers
Do you know who is a full-time, part-time or freelance employee? Make sure you are sending your workers the correct tax information. Full-time and part-time employees should be receiving W-2 forms while freelancers should receive 1099 forms. It’s also a good idea to make sure your freelancers are in fact freelancers in the eyes of the IRS—and not part-time or full-time employees.
4. To Deduct or Not to Deduct?
Can you deduct all those coffee meetings you scheduled last year? Can you deduct your home office? Can you deduct your clothes, your car or your grooming expenses? Make sure you are receiving all the deductions you can, but be sure that the IRS will agree with your decisions. You don’t want to get audited and end up in a pile of fees and unpaid taxes.