One of the biggest challenges facing small business owners is not growing revenue or figuring out ways to expand into new markets, but rather making sure they get their taxes right. No entrepreneur wants to run afoul of Uncle Sam – but the tax laws encompassing small businesses can be daunting for the uninformed.
Here’s a look at some top tax tips designed to help save your business money and keep you on the IRS’ good side:
1) Make sure employee withholdings are handled properly. Every employee must have the following deducted from their paychecks: Social security, state and federal taxes, Medicare, matching of any 401K programs (if applicable) and unemployment tax.
2) Keep all documents for at least seven years. If the government ever performs an audit on your business, they will ask to see records dating back for seven years. Plus, it’s just good business to track all financial transactions as you grow your business.
3) Remember all relevant tax deadlines. Businesses need to be aware of more than just April 15th. Estimated taxes for business are due quarterly, and employee taxes can be due weekly, monthly or quarterly as well. Missing deadlines can lead to big penalties from the IRS.
4) File your taxes online. When you file your taxes electronically, not only are they processed faster, but there is a strong chance that they will not be reviewed by lower level clerks at the IRS, thus reducing the odds that you will be audited.
5) Hire a professional. The easiest way to sleep at night is to hire someone who does taxes for a living to handle all your books. Accountants are a nominal expense when you stop to consider all the money they can save you in deductions and avoiding penalties.
6) Use the IRS, don’t fear them. The IRS has a wealth of resources available for growing business owners to help make taxes as painless as possible. Check out www.irs.gov for more information. You would be surprised how many of your questions can be answered in a snap.
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