Tax Preparation For Small Business (1)

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Tax Preparation For Small Business
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Tax Prep Tips For Small Businesses

• The taxes you pay as an employee are
  straightforwardyour employer will take out the
  appropriate amount, and you know exactly how much
  youll owe when it comes time to file your annual
  return. But when you have your own business, its
  a little more complicated. Not only do you have
  to pay your income tax, but if you run your
  business as a sole proprietorship or partnership,
  your taxes will be calculated on the profits of
  the companynot just what you earn in salary.

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• A successful taxpreparation strategy will
  help your small business save money on taxes.
  Avoiding paying unnecessary taxes can also
  increase your cash flow and improve your bottom
  line. Whether you prepare your taxes or hire a
  professional, there are certain things you can do
  throughout the tax season to keep more of your
  money in your pockethere are ten tips to help.
• Stay Organized
• Review Your Tax Records Early
• Make A Plan
• Consider Tax Credits
• Plan For Deductions
• Ask Questions
• Maximize Employee Benefits
• Use The Right Software
• Work With A Professional
• Dont Delay

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Save Throughout The Year

• Get started by reviewing last years tax
  return to learn what forms were required, how
  much income was reported, and how much was
  withheld from employees. This information should
  be used as a starting point when filing.

If youre thinking about starting a business
and think you might be able to save some money by
deducting some expenses on your taxes, do
yourself a favor and start saving throughout the
year. That way, if you do decide to jump into
entrepreneurship next year, you wont have to
take out a loan to pay all of your business
expenses upfront. Youll already have most of
that money saved up.
Calculate Your Tax Impact
When you start a business, one of your first
concerns will likely be how to keep from putting
too big a dent in your profits. Luckily, there
are tax laws and exemptions that make it possible
for small businesses to keep more money in their
pockets.
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Keep Good Records

• When calculating your tax impact, take a look
  at what types of deductions you can claim. Some
  common examples include direct materials and
  direct labor costs, as well as operating costs
  like rent and utilities.

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Make Use Of Deductions, Credits, And Refunds

• Hiring a professional to handle your taxes
  can be expensive, so to keep costs down, its a
  good idea to keep track of as much information as
  possible during tax time. Keep records of all
  business expenses and dont forget about keeping
  a log of incomeyou may not need it now, but that
  information will come in handy when you start
  planning next years taxes. Recordkeeping takes
  timebut then again, so does doing your taxes!

Make sure youre making full use of tax
deductions, credits, and refunds to minimize your
taxable income. When it comes to paying taxes,
there are two main benefits You can get a
deduction or credit that reduces how much tax you
owe, and you can get a refund when it turns out
you paid too much in. To claim these benefits,
however, you need to properly record and report
your business income. The first place to start is
with business expenses. You must keep an accurate
log of all your expenditures related to running
your companyeverything from supplies and
inventory to office supplies and advertising
coststo be able to claim them on your return.
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Check-In With Your Accountant During Tough Times

• Going to your accountant may be unpleasant,
  but these professionals can help you find methods
  of tax preparation that work best in tough times.
  If your business is struggling, its a good idea
  to know what deductions you can take advantage of
  and how to maximize profits while staying under
  IRS limits. Consult with your CPA at least once a
  year so he or she knows what is going on and can
  make suggestions on how to handle various issues
  that arise during tax preparation.

Keep Organized And Informed
If you own a small business, its important
to stay organized and informed about tax
preparation. Make sure that you know what each
line item on your return means and how to make
sure your finances are in order before you file.
Dont waitmake a plan now so that when it comes
time to file, everything is in order and you
dont get any surprises or penalties come tax
season.
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Leverage Technology To Help You Along The Way

• Tax preparation software helps make tax
  filing a breeze. Such programs can help save you
  money and time by allowing you to submit your
  taxes electronically, which means paying no fees.
  You can also complete your return yourself
  instead of having to rely on a professional to do
  it for you. By partnering with technology, small
  business owners can spend more time running their
  businesses and less time worrying about taxes.

Dont Forget About Those Self-Employed Taxes!
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• If youre self-employed, whether youre a
  freelance writer or an independent contractor,
  taxes are an important part of your business. If
  youre not well-versed in your tax laws, then
  hiring a professional can help ensure that you
  get it right. An experienced accountant or tax
  preparer should be able to find deductions and
  credits that can reduce your taxes and take some
  of that stress off your plate.

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Consider The Pros And Cons Of Hiring A
Professional Accountant.

• When youre first starting, it can be
  tempting to do all of your taxes. But that might
  not be your best option doing your taxes can
  cost more in time and money than getting help
  from a professional. Consider these pros and cons
  before deciding if you should hire an accountant
  or do them yourself.

Develop Relationships With Professionals Who Will
Help You Succeed.
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• Many entrepreneurs take on too much by
  themselves. From accounting to human resources to
  legal assistance, there are people you can hire
  or outsource to that can make your life easier
  and your business more successful. If money is
  tight, consider putting these items off until
  next year. But if you want to ramp up growth, it
  might be worth looking into bringing some of
  these professionals on board nowso theyre ready
  to go when (and if) you need them later in the
  year.

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• small-business/