5 Tips to Help When Filling Taxes for Your Business
If you are a first-time business owner, then the first year of operations can be an exciting time. You may have some great plans for expansion and are already turning a healthy profit. However, there is a time of year most first-time entrepreneurs hate, and that is tax season. Filing taxes for your company is completely different than filing for yourself. For the well-being of your business, you need to be sure everything on your tax forms is accurate and that you take advantage of as many deductions as possible.
- Separate Your Personal Expenses
As a small business owner, you may not think it is a big deal to just use your personal credit card for company purchases. However, this can come back to bite you when you need to file taxes. Anything you deduct needs to be specifically for your business. You cannot deduct personal expenses. An easy way to separate the two is to have a different credit card for the company.
- Check Equipment Purchases
In the event your business relies on expensive equipment to operate, you want to be certain you have all the information for those devices readily available. You can deduct thousands of dollars from your taxes if you know what to look for. Even company vehicles qualify.
- Maintain Records Throughout the Year
You do not want to take care of recordkeeping beginning in April. Maintaining records of all your company’s purchases should be done throughout the year. In fact, you should spend time every week going over your company’s finances to see what expenses you have. If you keep track of all entertainment, travel, home office and health insurance expenses throughout the year, then filing taxes come April will be so much simpler.
- Look Into Tax Credits
Your business can get further deductions if you qualify for specific tax credits. A very common one that many companies have utilized in recent years is the energy tax credit. If your company uses “green” appliances, then you can write them off on your taxes.
- Learn From Your Mistakes
In the event you make a mistake or misplace one of your expenses, there is no reason to beat yourself up over it. Know where you went wrong and do better next year. You have an entire year to improve your bookkeeping skills.
Filing taxes can be a bit of a chore. However, the process will be a lot easier to get through and take up less time if you prepare thoroughly throughout the year.