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Chris Bell

A Small Business Owner’s Guide To Tax Season

Running a small business is no mean feat because there is a lot that you have to manage with limited resources. Besides the challenge of dealing with cash constraints, being on top of your taxes can be the biggest concern. The best advice for business owners is to be prepared well in advance before the tax season hits. However, this is easier said than done because there is a lot that you need to be aware of. From deadlines to forms, deductions, credits, and penalties, there are countless things that can overwhelm you. The last thing that you would want to do is going wrong with the taxes and inviting trouble with the IRS. Here is a comprehensive tax season guide that can help small business owners to stay out of trouble. 

Keep note of the deadlines

The easiest and perhaps the most common way to get into a fix is by missing the deadlines for filing returns and paying taxes. Though people tend to make deadlines less seriously, missing them can cause major implications like penalties and audit notice from the IRS. Although April 15 is the date to remember as Tax Day, you may have some other important key dates based on individual business structure and factors like extensions. Make a note of these dates right at the start of your fiscal years and set reminders if you are prone to forgetting dates.

Maintain good records

Keeping track of the deadlines is just half the work done because you need to have your records in place for adhering to them. Moreover, you will be able to claim deductions only if you have proof that you spent the money in the first place. Maintaining good records, therefore, is vital so that you have a complete trail of expenses and receipts for the business. Hiring a professional tax preparer is a good idea if you are not comfortable with maintaining the books yourself.

Have an IRS tax attorney on board

If you think that having a lawyer on board is essential only when you face an audit or another tax issue, there is much more they can do for you. An IRS tax attorney can play an advisory role in the first place, guiding you about the best business structure you can have for saving taxes. Further, they can ensure that you do everything right while filing returns and paying taxes. A lawyer can also come to your rescue when you face a penalty. They can negotiate an installment agreement with the authorities on your behalf and even fight out your case in court if there is a need.

File electronically

Another good piece of advice that every small business owner should follow is to take advantage of electronic filing. While e-filing cuts down the burden of cumbersome paperwork, it also prevents mathematical errors in the forms since a computer double checks every single calculation on your return. Additionally, you get the advantage of ease and speed, while sidestepping the hassles and delay associated with mailing the return physically. Moreover, the risk of loss of an e-return is practically zero.

Don’t forget to keep a copy of the return

Having a copy of your tax return is something easy to miss but it is extremely important in case you are ever audited at a later date. Even though you file an e-return, keeping a physical copy handy is a smart move. There is always a chance of data loss or system crash and a physical copy can save the day in such events. As a rule of thumb, you should preserve the returns for up to the last seven years because you may need them as evidence subsequently.

Request an extension

Even if you do everything with good intentions, missing deadlines is still possible. Obviously, the thought of getting into trouble with tax authorities can be stressful but you should not panic at all. The best way to handle things is by filing an extension to get permission to file returns at a later date. This will ensure that you will not have to pay penalties or late fees for filing your returns late if you cannot do it on time due to unavoidable reasons. It is best to leave this task to an experienced attorney.

Now that you know the basics of taxes for small businesses, you will probably be able to breeze through the tax season without trouble. The most important tip is to leave nothing to chance and have a professional guiding you even about the smallest doubts and implications.