With Tax Day around the corner, it’s time for small businesses to buckle down and prepare to file if they haven’t already. Here are five tips all businesses should keep in mind as April 15 approaches.
1. Talk to a pro
Let’s start with the most important tip: Always consult a certified tax professional to be sure you have everything in order, are taking advantage of all of your opportunities and are eliminating the risk of red flags. Even if you’re a very small business and your taxes appear relatively straightforward, the peace of mind and legal clarity that come from partnering with a tax pro are well worth the price.
Additionally, using a professional payroll service throughout the year will help ensure you’ve been in compliance with federal and local tax regulations, minimizing nasty surprises during tax season.
2. Keep personal finances separate
There are a number of financial benefits to keeping your business and personal finances separate, but it’s also more professional. You want to be taken seriously when performing business transactions, something that won’t happen if you make a business move by writing a personal check. You also want the IRS to recognize your business as legitimate. It’s much easier to track expenses that are solely for your business if your personal and business accounts are separate. You will need to file an EIN for your business in order to set up an account under your business name. Once completed, make all business-related transactions from the business account.
3. Make use of accounting software
Everything will be organized at tax time if you consistently record revenue and expenses into accounting software throughout the year. Most software also helps you fill out and file your taxes, so you can have a good portion of tedious work done before you turn it over to your tax professional. Once reviewed, you can also use software to file your taxes electronically, which often means your taxes will be processed more quickly. (Accounting software can also help speed up your day-to-day accounts payable process, particularly if you’re using eChecks.)
4. File on time
The longer you delay filing your taxes, the more it will cost you in the long run. Your business may be subject to penalties, and you’ll accrue interest on your outstanding balance until you’re completely caught up with your tax bill. Even if you don’t think you’ll be able to pay your complete tax bill by April 15, you should still file before the deadline to avoid being charged a late filing fee. If, for some reason, you absolutely cannot file your taxes by Tax Day, be sure to file for an extension, which gives you more time and alerts the IRS that you do indeed intend to file. Keep in mind that different types of businesses have different filing requirements and deadlines, so April 15 may not be the only Tax Day you need to pay attention to.
5. Learn from the process
Whether it’s your first time filing taxes as a business, or you’ve been doing it for years, there is almost always something to learn from the process. And, if you still have questions about tax-time tips or terminology, you can always check out our Finance Fundamentals eBook. As you become more familiar with the tax do’s and tax don’ts, you’ll save both time and money each year.
Bonus tip: Avoid payroll-related penalties
Why worry about keeping up with ever-changing payroll tax laws? Outsource your payroll to Deluxe Payroll Services, and breathe a sigh of relief. We’ll stay on top of the regulations, plus all the required record keeping and reporting, so your payroll is processed efficiently, accurately and right on time.
Are you prepared for tax season? If not, it’s time to get moving. Use these tips along with guidance from a tax professional to get your business ready.
Editor’s note: This article consists of general recommendations and is not intended to serve as financial, tax or legal advice. Please consult a tax professional regarding the obligations and regulations that pertain to your business. This article was originally published in 2018 and has been updated for accuracy and relevance.