Tips for tax time

If you own or manage a small business, you probably already know that tax time is a hectic time. Reduce your stress next year by being tax smart all year long. Here are some ideas to help you do this.

Keep meticulous records all year long-there will not be nearly so much stress for you at tax time if you keep good records all year long. Rather than scramble around a the beginning of the year trying to find all your reciepts and remember every thing you did with your money last year, how about just printing out your records and sending them of to your CPA? By using accounting software, you can keep tracks of taxes paid, expenses, debts, charitable donations, and incomes with little effort. Some of the accounting software programs that can help you keep meticulous records include PeachTree Complete, MYOB Business Essentials Pro, Quickbooks Pro, and NetSuite Sm. Business Accounting. These programs all receive good ratings, are user friendly, and will help keep your records in order. MYOB Business Essentials Pro even offers tax services on the software.

If you don't want to use a computer program to help you with your accounting, you should be extremely careful with all of your financial information. You should balance your books and account for all expenses and incomes on a weekly basis.

Deferring income-there is a game that is played at the end of each year, which perpetuates itself into the next year. This game is trying to make as many payments or donations as possible prior to December 31st and trying to wait to get paid on any outstanding accounts receivable until January 1st. If you can defer income until after January 1st, you will not have to pay taxes on that income until the following April. The reason that this came perpetuates itself is because the payment is only deferred, it is not forgiven. Still, people play this game all the time. After all, if given a choice of paying money now or paying money a year from now (with no interest) most of us would say that it is a no-brainer.

Don't defer your payments-it might be tempting to defer paying your taxes, or even to just not do them. The problem with yielding to this temptation is that your cannot win when you are dealing with the IRS. They will eventually get the money that you owe, and, they will take a nice percentage more for their trouble. No matter what your financial situation is, you should always pay your taxes and you should always pay your taxes on time. Even if you have to take out a loan to pay them with, the interest on the loan will almost certainly be lower than the interest and penalties charged by the IRS.

Use an accountant-tax time is really no time to be "doing it yourself". Even if your business is really small and you feel like the taxes are simple and straight forward, you will still be better off going to a professional at tax time. Find a certified CPA to do your taxes. These people have spent time studying the nuances of taxes, business law, and accounting. They are far more qualified to handle your taxes than you are and using a CPA will probably ensure that you pay the least amount on your taxes as possible. Finding a really good accountant might require a little work on your part. Ask around. If you have friends or associates in business, particularly if they are in the same business as you are, find out who they recommend.

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Tags: taxes tax time business business finance small business records accounting software accountants CPA deferring income IRS