According to data from the Small Business Administration (SBA), more than 79 percent of small businesses have no employees, meaning that a vast majority of small business owners handle all aspects of their business on their own. And when tax season rolls around, it can mean plenty of stress for owners of small businesses.
A recent Washington Post column provided these five tax season tips for small business owners:
1. Track all itemized deductions, including assets. Thanks to Section 179, small businesses can deduct a majority of their capital purchases for the year those items were purchased. This includes office supplies, software programs, equipment, vehicles and more than can add up to deliver a significant reduction in your tax bill.
2. Well, there’s an app for that! There are dozens of apps for iPhone and Android that help simplify the tax process. Shoeboxed and Receipt Filer let you take and store photos of receipts during the year that will help drastically reduce the time spent searching and organizing paper receipts.
3. Stay organized. Make a list of all the expenses you want to track and then create files for each category. Drop your receipts into these files as you acquire them, and voila! You’ve got all your expenses organized and categorized for the tax year.
4. Update your W-9s. You will need to report all your contract employment expenses, so you need to be sure that you have current W-9 forms on file for all your contractors.
5. Seek out the savings. The Small Business Jobs Act of 2010 contains a number of great savings for small businesses, so don’t overlook the opportunity to take advantage of these.
The SBA also warns small business owners of common audit traps to avoid, including misclassifying employees as contract workers, mixing personal with business expenses, taking a large sum miscellaneous deduction, and claiming a home office deduction that does not qualify.
If you’re a small or mid-size business owner, call us today to schedule your comprehensive LIFT (legal, insurance, financial and tax) Foundation Audit. Normally, this session is $1,250, but if you mention this article and we still have room on our calendar this month, we will waive that fee.
