Did you know that you can file your tax return forms for free depending on which platform you use? That is just one tip. Keep reading this guide to learn four essential tax tips for your small business! in the US pay an average federal tax rate of 19.8%? However, many factors affect this rate, like if you’re a sole proprietor or have a small partnership.
There are so many tax rules to know that it can make running your business even more complicated. To get on top of your tax situation, you’ll need to learn key tax tips to help you navigate through tax season smoothly.
Keep reading this guide to learn four essential tax tips for your small business!
- Keep Detailed Records and Save Receipts
Navigating tax season will be much less painful if you keep detailed and accurate records. First, make sure to keep up with tracking expenses. When you neglect this, you’ll miss out on business tax deductions.
For example, you can deduct business expenses from the taxi you took to a business dinner.
You’ll also need to save every receipt. If you’re unsure whether the expense counts as a business deduction, you can do some research later or talk to a tax professional.
Remember, maximizing your business deductions is crucial to reducing your taxable income.
- Learn More About Small Business Tax Credits
Tax credits are like free money that can significantly lower your tax bill. In fact, tax credits are one of the most effective ways you can reduce tax liability.
Some of the best tax credits for a small company include:
- General business credit
- Small business health insurance premium credit
- Small business pension plan startup credit
- Credits for making your business more accessible for people with disabilities
- Credits for hiring people who have barriers to employment
- Employee retention credit
- Track Your Inventory Accurately
You’ll notice a section for inventory value when you file taxes for your small business. Inventory value is the amount of money invested in unsold inventory.
It’s essential to have an accurate inventory count to assess your inventory’s value correctly. This way, you’ll be able to determine if your physical inventory count and the numbers you have match up at the end of the year.
It’s worth investing in quality bookkeeping software with inventory accounting, like QuickBooks or Zoho. Doing this will allow you to have one central place to look when you reconcile the information for your company taxes.
- Hire an Accountant
Remember, you didn’t start your own business to become an accountant. You’re trying to make money.
So, one of the best things you can do for your company finances is to hire an experienced accountant. Make sure you choose a certified public accountant (CPA) or a business accountant familiar with various business structures and inventory-based businesses.
You should work with your accountant during the year to track your income and spending, not just at tax time.
If you need a tax accountant for your business, you can check out this business accountant for more information.
Tax Tips for Your Small Business
Following these tax tips will help make tax season much less stressful.
Remember, it’s never too soon to prepare for the upcoming tax season. Don’t hesitate to hire an accountant to help you with the financial management of your business all year long.
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