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5 Ways to Make Filing Your Small-Business Taxes Easier

Maintain accurate records and check your accounting software on a daily basis to make filing your small-business taxes easier.

This article will be a guide to make filling of taxes less painful, we will go through 5 ways to make filing your small-business taxes easier.

If you’re one of the millions of small-business owners who put off filing their 2020 U.S. taxes until Oct. 15 (you know who you are! ), the extended deadline is quickly approaching.

Worse, consider this sobering fact: Your 2021 taxes are due in less than six months. Don’t be concerned.

We spoke with experts to get advice on how to meet that deadline for filing of your small-business taxes.

“This is your chance to act on the words you mumble under your breath and establish good habits for the rest of the year,” says Jaclyn Strauss, CPA.

Update your accounting software on a daily basis

Strauss confirms, “daily.” Most business advice suggests weekly or monthly, but approaching accounting like a daily email check means you’ll itemize transactions in a matter of minutes because you’ll remember them offhand. Easy-peasy.

“Check your profit-and-loss statement and any unpaid invoices” while you’re in QuickBooks, Xero, or whatever program you use, says Strauss.

Constant financial engagement is about more than just taxes. “It gives you a deep understanding of how your business is doing throughout the year, as well as the types of activities you have,” says Mike Jesowshek, CPA, and host of the Small-Business tax Savings Podcast.

5 Ways to Make Filing Your Small-Business Taxes Easier

You’re also more likely to do a better job simply by recalling cash expenses that you might otherwise forget about in a week and fail to deduct. “The most common issue we see is incorrect bookkeeping,” he says.

Compile a good record collection

It is not enough to simply record transactions in order to claim certain deductions. “Taxpayers must substantiate the amount, location, and date of each expenditure, as well as the business purpose for each,” says Alex Oware, CPA and tax expert at JustAnswer.com.

Another reason why five to ten minutes of daily accounting is a good idea: You’ll recall that you drove 32 miles yesterday, ten of which were for business, and that your $25 lunch was tax deductible because you ate with your intern. All of these details should be recorded in memos alongside transactions, it helps in filing small-business taxes easier.

Skip the extension the next time

“A common misunderstanding is that filing an extension also extends the time to pay,” Jesowshek says. “No, it does not.” Tax day is April 15 (or close to it, if there isn’t a pandemic), and interest and penalties begin accruing on that date. If you do request an extension, he advises you to “include a payment.”Doing so will make filing of your small-business taxes easier.

Tax strategy

What is it that afflicts the soul? Completing 20 to 80 hours of accounting in October only to discover an unexpectedly large tax bill—and it’s too late to do anything about it. Instead, “implement strategies throughout the year to ensure you pay the lowest taxes legally possible,” according to Jesowshek. “This is extremely important. Many strategies are no longer available once the year is over.”

Mapping up a good plan and executing it helps in making filing of small-business taxes less painful.

Now is the time to meet with a tax expert

While you’re scanning those receipts, “consider your overall tax plan,” says Brent Johnson, co-founder of Clarus, a company that provides business tax incentive software. You’ll want to talk about your business structure (LLC, C corporation, S corporation), accounting methods (cash vs. accrual, inventory capitalization), available incentives (tax credits for green energy, work opportunity, employee retention), Covid-related programs, and retirement plan usage—all of which can have a significant impact on your tax bill.

Universal Music’s debut on electric stock market leaps with a valuation of $55 billion A meeting this month could make April 15, 2022, less painful and even, dare we say, sweet.

Hope these key points will enable you make filing of your small-business taxes easier.

Bloomberg News

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