Small Business Tax Tips
It’s that wonderful time of year again – no, not the holidays, but tax time. There are several kinds of taxes; income, self-employment, employment, sales, and local. This article from the SBA is a great place to start if you’re unsure which apply to you. For small businesses, this can seem like a huge feat, but you can do it! Here are some things to keep in mind when filing this spring, and all year long.
Keep personal and business finances separate
First and foremost, it’s important that your personal and business finances are separate from one another. The first step to creating a sustainable business is to treat it like one! By thinking of your business as its own entity, and tracking finances as such, tax time will be much simpler each year. This means opening a separate bank account and everything, just for the business.
Make sure you’ve filed your LLC or business entity, too. This is the true first step in keeping business and personal details separate.
Remember that federal, state, and even city tax rules are different
Different kinds of taxes have different requirements, so it’s imperative that you know which ones apply to your business. To learn more about business taxes in the State of Michigan, head here. With the help of the Michigan Department of Treasury, you can ensure that you’re filing all of the proper taxes for your small business.
Use tax software or hire a CPA
Sites like TurboTax, H&R Block, or Tax Slayer are all good options. The Internet certainly can make things easier – and sometimes more confusing. If you’re using an accounting software like QuickBooks, your business records should be up to date. These programs often connect to each other for business tax filing. If you’re comfortbale, then using this software may be a great option for you. If you’re not sure what to report, deduct or what to do, then it makes sens to turn to the professionals. Having a have a bookkeeper or an experienced CPA who can assist you throughout the process is comforting to many small business owners we know.
If you’re not sure and want to connect with a professional for an evaluation, GROW does have several tax and accounting expert volunteers we can connect you to. Just ask!
Keep track of spending
Or as the kids would say today, “I have the receipts!” By keeping track of spending, whether it’s mileage, meals, or business supplies, you’ll save yourself a headache come tax time. These deductible expenses can be extremely important as a small business, so it’s a good idea to invest in something that can help you keep track. Mint is a good option or even QuickBooks. With these, you can create a specific report on spending, streamlining the process and saving your brain power for more important aspects of running your business.
Don’t shy away from the home office deduction
Contrary to popular belief, this is NOT a bad idea and will not affect you negatively. It can actually save money when filing taxes, so don’t be afraid to use it as a deduction on your taxes this year if you work from the comfort of your home.
Tax time certainly isn’t fun, but it’s absolutely achievable for you and can be less stressful than you think. With these tips, your small business will maximize money saved and be able to thrive for years to come. Questions? Contact us today!
These are recommendations and advice only, not to be taken as tax planning advice. If you have a specific tax or accounting question, we are happy to connect you with professionals in our network. When in doubt, we recommend that you always ask a tax professional.