Filing your income taxes seems to get easier every year. The Internal Revenue Service (IRS) tries to make the process as easy as possible for every American, including small business owners. When you take a look at filing your taxes at the end of the year, everyone who owns their own business should look into e-filing and tax preparation software. Most people already have computers. After that, it takes just a small investment to make your tax time a joy instead of a hindrance.
Know the Code
The IRS has plenty of resources and guides for your small business needs. Their website has every kind of form and instruction available for American small business owners. Whether you have a P.C., LLC, partnership, limited partnership, or you find out you are self-employed, the IRS website has a searchable database that find the tax information you need.
You don't have to be a tax lawyer to know what business practices get you greater tax breaks at the end of the year. Knowing them ahead of time will help you plan for your tax filing and get you greater write-offs. Finding out if your employee health care plan is worth more or less in a given year may seem tedious, but every little bit helps.
Choosing Tax Software
Some small business owners may feel like buying tax software is a waste of money. Consider how much time you spend each year filling out forms, using your calculator, and compiling forms. If you buy an $80 version of income tax software and you make $80 per hour working in your business, calculate how much time you would save if you just spend one hour less doing annual taxes. The efficiency of the authorized tax software pays for itself.
Make sure you look at reviews on reputable computer software magazine websites to find the best tax software for you. It should be compatible with any computer accounting software already on your computer. Downloading numbers such as revenue, income, and employee payroll should be seamless from your account software to the tax software.
Oftentimes, tax software is cheaper than an income tax service. Finding a simple one that uses plain language should be fairly simple. If you don't want to look for online reviews, your local computer software store will have salespeople with valid suggestions right for you. If you get a refund, with tax preparation software you can get a return as quickly as seven to 10 days with your bank account routing information.
Keep Running Totals
Keeping running totals throughout the year will help make the tax process more manageable. When it comes time to input numbers into a computer, either your accounting software or your own calculations will keep the process simple. Having numbers on hand such as revenue, expenses, overhead, and sales can make filing go that much faster. Just a few minutes out of each day can take hours off your time spent doing taxes. If time is money, the efficiency adds up over months.
The IRS website has a ton of online resources. Instead of getting paper files, look up any questions about instructions online. You can even file paperless returns if your business qualifies. Each file is saved in a PDF format. You can use your browser's "find" function to look for specific words or lines in the tax form without having to hunt and peck through potentially small type on a sheet of paper.
Your accounting software will also help make the transition to a paperless office much more efficient. If you need to print anything out, both the accounting and tax software will allow you to print whatever forms you need at any time.
Look for Breaks
Every year, Congress rewrites certain tax laws that give benefits or breaks to taxpayers. There are plenty of documents with which these breaks are touted. A fully updated version of your tax software should also give you the best chance of finding tax breaks that you may not know about.
It helps to already know what tax incentives you get from year to year. Looking for some potentially new tax breaks such as hiring someone who has been unemployed for a year or giving a job to a veteran can give you extra money after you file your taxes.
Keeping things simple at tax time and using tax software will take the headache and leg work out of filing your taxes. Taking some tiny steps now will save you the arduous journey every spring when the income tax deadline approaches.
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