When tax time rolls around, will you be prepared? Taking a few moments to review these helpful tips before you begin your tax returns may help reduce your tax burden - and stress level. Always be sure to consult your tax advisor first!
1. Pay what you owe when it's due. Putting off paying the IRS will only end up costing you more in the long run, with interest and penalty fees tacked on to the original debt. Even if it means negotiating a different repayment schedule with your creditors, you'll be better off paying your taxes when they are due.
2. Plan around year-end tax deadlines. There are a number of things you can plan to do in the current year to increase deductions and reduce your end-of-year tax liability, including:
- paying bills early
- buying supplies and equipment
3. Keep financial records current. Organized and updated company financial records make life a lot easier at tax time. More importantly, it lessens the chance that you will miss legitimate expenses due to lost receipts. Remember, every dollar of documented expenses means one less dollar of taxable income.
4. Leave it to the experts. Experience pays! Armed with the most current list of tax regulations, professional tax consultants are experts in helping small businesses minimize their tax liability. A capable professional will know how to keep you out of trouble with the IRS by providing valuable tax tips and information on legitimate deductions that you may have over looked.
5. Write it off! Some "ordinary and necessary" deductions are obvious, including salaries and rent expenditures. But don't overlook other possible deductions such as business losses, business travel expenses, start-up costs, vehicle expenses (if your car is used for business purposes), and principal and interest paid on business loans. *Consult a tax consultant to find out which deductions apply to your business.
*In most cases, the principal and interest payments on a business loan are classified as business expenses, and may be deductible.
6. Contribute to a retirement plan. Make payments to your retirement plan, or set one up (401(k), KEOGH, IRA or SEP). Contribute up to the maximum limits for your type of plan and help reduce taxable income.
7. Educate yourself. The IRS Business website is a great source of information for small businesses, particularly on important topics such as employee taxes and business tax deductions. Plus, there's an extensive list of related government resources. Visit irs.gov/smallbiz for more information.
Visit http://www.intelligentoffice.com/
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