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Tips for Tackling Tax Season

2 minutes Read

For small business owners, tax season can be an especially stressful time. However, much of this anxiety can be avoided by taking certain actions throughout the year to ensure your finances are in order and your taxes are ready to be filed. Here are a few tips to help ease your tax-season stress:

Record, Record, Record

When it comes to maintaining the financial health of your business, few things are more important than keeping robust records. Be sure to invest the necessary resources and time to create a bookkeeping system that accurately tracks all business expenses, profit and loss, and any eligible tax deductions. If you’re a detail-oriented person, Excel can be an extremely helpful tool in maintaining your records. You can also tap into automated accounting services such as Quicken and QuickBooks or work directly with a CPA. No matter the approach you choose, it is vital that you work to maintain diligent recording standards within your business, and keep any records for at least seven years. Finally, don’t forget that although technology/automated accounting services can make your life easier, you always run the risk of losing information because of misplaced hardware or a software failure. Luckily, there are a number of services that allow you to back up data via the cloud for free or at a low cost.

Separate Business and Personal

As an owner of a small business, you may be tempted to use your personal bank account or credit cards for business transactions or expenses. Although it can seem more convenient or cheaper to have everything in one place, it will cost you dearly in the long run. By keeping business and personal expenses separate you can avoid wasting valuable time and energy sifting through a year’s worth of expenses when filing your taxes. In addition to helping to maintain separate records, signing up for separate business accounts and credit cards such as Capital One Spark or American Express Business can provide valuable rewards and savings that you can reinvest into your business.

Understand Your Deductions

Although small business owners are often aware of the most popular tax deductions such as travel, healthcare, and home office, they often fail to claim all available deductions. In order to maximize your deductions, you need to a) Have an understanding of all deductions you qualify for and b) Ensure that you have either physical or digital proof of receipts to provide the IRS. This goes back to the importance of maintaining a strong record system that tracks and records all business-related expenses. To better understand your potential deductions and tax requirements you can consult with a CPA and/or review the IRS’ 2017 Employer Tax Guide.

If your business is planning ahead for 2018, owners may want to consider a short-term infusion of working capital. Investing in your business now can help your business qualify for additional tax deductions during tax season. If you are an existing CAN Capital customer, reach out to your renewals rep to see if you qualify for additional capital.