So, it’s that dreaded time of year again- tax season. I know it can be stressful, not only because you have to give up a part of your hard-earned income, but with changing tax laws, the filing process for small business owners can be complex and daunting. And if you don’t do it correctly, you can even face stiff penalties.
But don’t fret—there are ways you can make this tax season less stressful for you as a small business owner, as well as tactics that you can implement year-round to help you tackle your taxes (and maybe even enhance your refund). I recently moderated a Google Hangout presented by Bank of America*, which included CPA Ebong Eka, Small Business Expert and USA Today Columnist Steve Strauss, and Bank of America National Sales Executive David Solis. We generated fantastic insights to help save you time, maximize your deductions and avoid penalties.
You can watch the full event here, but some of the key takeaways included:
Get Organized- One of the easiest things that a small business owner can do to help improve tax season is preparing year-round and being organized. Use your business bank account card or credit card to make purchases and pay expenses so that you have a paper trail that you can use to compile your financials. Plus, by using accounting software to put together your initial financial statements, digitizing your receipts and making sure you don’t co-mingle personal and business funds, your daily habits will be your best first step.
Get Help- and the Right Help– While there are times when doing things yourself is worthwhile, not using a CPA to help with your small business tax planning is penny-wise and pound foolish. You want to make sure, though, that you have the right accountant that specializes in working with small businesses (instead of just your Uncle Ira, the accountant).
You also should use your small business banker as your key advisor to help put together your small business “dream team” of advisory professionals to get you the help that you need. Additionally, there are myriad tools and resources that you can use to help get you more information, get more organized and streamline your taxes and accounting. From FreshBooks for invoicing to QuickBooks for creating financial statements, to the IRS’s own website to help clarify information and mobile checking and e-filing tools available from Bank of America, technology is definitely your friend when it comes to your business’s taxes.
Communication is Key- You want to be asking your accountant the right questions and providing all necessary information, like forms 1099 and K-1s for any partnership interests. Ask questions about quarterly estimated payments that you may have to make or if there’s an optimal time to make a capital equipment purchase. And, of course, make sure that you understand everything that is communicated back to you—at the end of the day, you are the one responsible for any errors (and associated penalties) if something is filed incorrectly.
Keep an Eye on Healthcare Changes- You will want to speak to your accountant to talk about the changes in healthcare that the Affordable Care Act has brought about. For example, a self-employed individual who pays their own healthcare premiums may deduct those expenses on their tax returns. However, if you didn’t enroll in healthcare coverage, you may face penalties under the ACA in 2014. And if you have higher income, there’s an additional Medicare tax.
You also can use great tools from Bank of America to help you to estimate your healthcare costs and use HSA accounts going forward to help manage your healthcare expenses and benefits.
Take Advantage of Retirement Planning- Talk to your small business banker and your accountant about utilizing retirement planning effectively. Setting up a retirement plan or revising an existing one, whether you are self-employed or have employees, is a fantastic vehicle for all. Not only can you put up to more than $200,000 away per year on a tax deferred basis, but you take an active role in preparing for your retirement and can give employees an important and valuable perk as well.
You can get more details on these tips and some additional tactics to help you gain even more momentum in your own business by watching the 30-minute video of the event. Make sure to make the time to do this and pursue other strategic endeavors where you can work on your business, not just in it. It’s worth investing a half hour of your time to take your business to the next level!
*Disclosure: this company has a client relationship with CarolRoth.com or its affiliated entities