“Few of us ever test our powers of deduction, except when filling out an income tax form,” or so the joke goes.
Now may not be the time when small business owners give the 2008 tax season too much thought. But a little tax preparation now – in the midst of the holiday season – can pay dividends down the line.
Consider some basic strategies for taking control of your taxes now, before they take control of you:
1. Get Your Ducks in a Row
Take control, get organized, and gather all the necessary records and documents that help support the numbers filed on your tax return. Records include W-2s, 1099s, expense receipts, bank statements, etc.
2. Look into Available Tax Preparation Resources
While there are many tax preparation software options available on the market, as a small business owner you may want to consider using a professional tax advisor or accountant. Not only can these professionals keep your stress levels low, they can help you navigate the ever-changing landscape of small business tax deductions.
As a rule of thumb, professional help becomes a must if you have accrued significant capital from stocks or the sale of assets, or have income from several sources (e.g. consulting, other business interests, etc.) and/or overseas markets.
Be sure to shop around for the right professional – preferably someone with experience in your field of business and within your budget – and don’t forget to get recommendations from friends, co-workers, or clients.
3. Stay Abreast of Tax Requirements
You don’t need to be an expert, but life is a lot easier if you are aware of the basic tax laws that apply to your business. Even if you don’t handle your own preparation and filing, it helps to have a better idea of what to expect as a small business owner.
An easy way to start staying on top of your records is to maintain a tax calendar throughout the year. The IRS can help with this and has put together a Small Business Tax Calendar that lists everything you need to know about staying on top of tax deadlines and requirements throughout the year. It can also be imported into Microsoft Outlook.
If you need more general help, this online portal brings together SBA and IRS tax guidance and resources specifically for small businesses.
The U.S. Government also provides online tax training, workshops and more to help small business owners get a better handle on their business taxes.
Lest early talk of taxes dampen your holiday season, I found a quote by Nancie J. Carmody that puts it all in context (well, somewhat): “I am thankful for the taxes I pay because it means that I’m employed.”