Small business owners oftentimes think of tax season as one of the most stressful and confusing time of the year. Especially for those startups who are filing for the first time because their ability to asses their taxes can determine if they can make profit and be successful in the market. Bookkeeping and tax preparation are considered by entrepreneurs to be the worst part of having a business. However, the stress linked to this responsibility can be greatly reduced if your organization starts preparing in advance.
Here are 4 important tax season tips for startups:
Arrange Your Files Ahead of Time
Preparing your files is a long-year process. Every expenses and deductions made should be checked again and be verified through your records. Keeping an accurate record will help you effectively calculate depreciation. These documents can be stored in a physical file or a digital storage.
Use Accounting Software
A lot of small businesses use accounting software for detailed record-keeping. These programs will be your helping-hand when it comes to establishing diligent bookkeeping practices in your company. Accounting software like QuickBooks, MYOB, Sage50, and SAP has a lot of features that will keep you on the right track and enable you to face tax season head-on.
Don’t Leave Any Deductions Out
Deductions reduce your taxable income. You should add up each deductible expense and compare it to your filing status and decide which one is the best for you. These deductions can come from work-related travel, accommodations, debt-interest, charitable donations and moving charges, costs related to job hunting, and home office expenses for those who are self-employed.
Ask For Help
Find a Certified Public Accountant (CPA) who you trust. Do not hesitate to ask for their advice because they can help you categorize your business expenses. This can help you get the most beneficial tax treatment. A CPA can also guide you in choosing the right accounting software that will meet all your business’ needs.