Giving your taxes your full attention just once a year isn’t the best business strategy. Experts suggest that a year-round approach is better for your finances. Click through to learn the best ways to evaluate the impact of taxes throughout the year.
Numerous tax experts agree that addressing your tax liability effectively requires tax planning throughout the year. Those business owners who reap the most benefits consider their taxes year-round, rather than waiting to focus on tax payments just a few weeks before the filing date.
A typical small business qualifies for roughly a dozen tax deductions. For example, you may be able to claim deductions on the following:
- Cars operated for business purposes
- Business-related travel and entertainment expenses
- Purchases of office supplies, furniture, equipment, and software programs
- Telephone expenses
- Contributions toward insurance policies, retirement plans, and pension funds
It’s surprising how many small businesses never take advantage of these deductions, mainly because they suffer from the “tax-planning-happens-but-once-a-year” syndrome. To fully benefit from these deductions, it’s important to maintain your expense records throughout the year.
Your goal should be to reduce your tax liabilities by retaining records of your purchases. By monitoring your expenses closely all year, you can analyze each expense for its tax impact as it’s made. Additionally, smart business owners should contemplate three key steps to tax planning:
1. Invest in a record-keeping tool for your business. Whether it’s spending roughly $30 on journals and tax books with a set of refill sheets costing less than $10 to do manual bookkeeping or investing up to $2,000 on the latest online accounting software, you will benefit from more rigorous and accurate record-keeping. Excel spreadsheets, Quickbooks Desktop, QuickBooks Online are some of the more popular options.
2. Determine when you need professional tips and tax planning advice. At times you will be able to justify paying for professional tax services, particularly if you need advice on unclear requirements in tax laws that could be in your favor. To prevent unnecessary complications and aggravations, you must avoid violating tax laws that may be applicable to your small business and having professional advice when needed, can help you keep your taxes under control.
3. Establish year-round tax planning goals. A good tax-planning strategy will help you accomplish some of these goals:
- Reduce the amount of taxable income
- Claim any available tax credits
- Lower your tax rate
- Control the time when taxes must be paid
- Avoid the most common tax-planning mistakes
Give us a call to see how can we help you and your business staying on top of your tax bill!