According to Molly Brogan, vice president of public affairs for NSBA, one in three small business owners annually spend two full workweeks on federal taxes. 87% of small business owners reported that they have to pay an outside accountant or return preparer because the forms are too complicated to do independently.
As a small business owner, you already know that sacrificing a couple of hours to prepare your taxes can sometimes feel like a challenge, much less the two weeks that you may need to allocate. Here are three tried and tested tax tips for saving time during tax season:
Use a payroll service
As a small business owner, you are required to calculate and file federal, state and local payroll taxes on behalf of your employees. You also have to keep track of deductions for social security and Medicare taxes, unemployment taxes and new hiring reporting.
I was shocked to learn that only 44% of small business owners use an external payroll company. Payroll taxes can be extremely difficult to figure out, as well as very time consuming. Using an outside payroll company will make tax time much easier for you. All of the information will be automatically calculated and can be done in a couple of minutes.
Prepare in advance
“Success is where preparation and opportunity meet.”
This is one of my favorite quotes from Bobby Unser, a famous American racecar driver. If there is one thing that I’ve learned over the years, it is the importance of being well prepared for tax time. There is nothing more stressful than scrambling to get all of your taxes done late in March. Not to mention, you can lose focus on your business if you are only fixated on filing your personal taxes.
Throughout the year, I’m in constant communication with our accountant; I want to make sure that my company is well prepared and that there are no surprises come April. Tax preparation for business owners requires a lot of expertise. If you feel you can run a business yourself and file your own taxes, all the power to you! I recommend getting a hold of a person who does this professionally, so you can focus on the business.
Did you know that office equipment purchases can be counted as business deductions? You need to be very careful that all of your deductions are in compliance with the IRS, though. That being said, business owners need to make sure they don’t forget to deduct expenses associated with their business. Expenses deducted from your bottom line should include office supplies, computers and software, advertising and travel expenses. This could save you time down the road while helping to grow and improve your business.
Business owners wear a lot of different hats. The ones that can run a company while filing their own taxes are superhuman, in my opinion. Regardless of whether you file your own taxes, have a professional in-house or use and outside resource, make sure you plan well in advance for tax time. This will alleviate stress and make sure that your filings are well prepared so you can focus on your business.