No one really looks forward to tax season and for small business owners, it seems to hurt a little more. As a single mom with my own business, I do not look forward to filing taxes as it is a time consuming and tedious process. While owning my own business is great for working on my own time and feeling fulfilled, it certainly lacks appeal when it comes to tax filing.
Receipts, Receipts, Receipts
When you own a small business, you have to keep track of everything. Every business owner has their own way of keeping track of receipts, some in a shoebox and some more organized, in a filing cabinet. It is important to keep track of receipts so that you can have a record of what you spent on your business throughout the year. This can include lunches, items purchased, repair needs, etc. Your accountant will be able to help you learn what to keep but with so many deduction options, you may find yourself quickly overwhelmed as to what you can claim and what you need to keep up with to do so.
Going Over Deductions
Once your tax appointment arrives, you will begin to go over your items with your accountant. This can take a few hours if you have a long list of deductions. The boring and stressful process can then seem to go on forever as you take each deduction and calculate it carefully to try and cut down on your revenues and hopefully have to pay less.
Paying your Taxes
Once the process is complete, you will then learn how much you have to pay. When you own a small business, you can usually cut back your earnings to a significant margin to only pay a small amount to the government. However, this amount can still be in the hundreds to thousands. It is recommended that you talk with your accountant to determine if you are better off paying once a year after filing or if you should consider making payments throughout the year to owe less once you file.
Overall, it is essential that you keep track of every aspect of your business. You need a record of earnings coming in and money spent. This will include employee payments, product costs, etc. Having a knowledgeable accountant will help you to gather the right information to file your taxes correctly and hopefully not have to pay too much after filing.