Every penny counts when you’re a small business owner. Similarly, many successful business owners suffer because of their lack of time. There just aren’t enough hours in the day to get everything done yourself when you’re running a business. However, please make sure you have scheduled a few hours to work with your accountant/financial planner to ensure that you’re doing the essential things to pay the minimum amount of taxes every year. Tax planning is even more valuable and complicated for business owners in Oregon.
Reducing taxes may be the disparity between a booming business and one that is just scraping along. Tax season! These two words seem to make every small business owner flinch, cringe or wince. Running a small business is already a challenging job without adding the complicated and time-consuming task of filing taxes every year. Making financial decisions without taking suggestions from a financial adviser or accountant can put you at risk and cost you more in the long run. Here are the top 5 ways you can tame the anxiety of small business taxes and probably put some extra money back into your pockets.
1. Use a Bookkeeping Software
Bookkeeping software is mandatory for small business owners. Software, like QuickBooks Online or some other software similar to this, will make preparing and filing your business taxes online much more manageable. It’s time to ditch the paper and pen. According to an IRS report, online tax returns errors are less than 1%. That number goes up to 21% when you use paper to file returns. If you think that you’re too busy for all this, hire a bookkeeper or a tax professional to assist you.
2. Track Your Expenses to Make the Most of Tax Deductions
Keeping a record of your spending is extremely easy these days, but it can still look daunting to some people. Most credit cards will only send you a yearly report, and you can check all your bank transactions online. Although online banking has made things much easier, there’s still a lot of room to miss worthwhile tax deductions. Tax deductions are helpful no matter where you’re based in the world, but tax planning is crucial for small business owners here in Oregon.
3. Retirement Account Payments
Nobody has more retirement planning options than small business owners or self-employed freelancers. For this group, you can still reach out to a traditional IRA like everybody else, rounding off $6000 per person. This form of IRA can be merged with retirement plans like SEP-IRA or 401 (K), thus enabling you to put up to $58,000 yearly. For those who are above 50, contribution limits are even higher. Stack a Cash Balance Pension Plan with 401 (K), and you may be able to cast away nearly $150,000 yearly.
When you’re income-intelligent, you can reduce your OR tax bill and federal tax bill. Contributions to the business tax plans written above will lead to a significant tax deduction.
4. Write Off Your Home Office
Many people working from home don’t opt for the home office deduction. If you are working from home, check if you are eligible for this tax deduction. You may be stunned by how much money you can save.
5. Track Your Delayed Tax Deductions
We’re talking about business tax deductions for people whose eyes glaze over net operating losses, capital losses, huge charitable donations, or home office deductions. These are a few credits or deductions that might be carried over to a future year when not wholly used in a year. These things have a way of slurring over the cracks, particularly when changing tax return preparers. Make a track or note of these deductions, so you remember them the following year.
Small business ownership is challenging enough without worrying about all these tax filing details. For your own good, break up the accounting all through the year and allow a bookkeeping software or a hired professional and certified CPA to perform the most difficult tasks. Tax season will become a breeze when you apply these tips, and you’ll forget why it stressed you out in the past years.
