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Tax Tips for Small Businesses

by Nathan Zachary

As a small business owner, you’re likely responsible for handling your company’s taxes. This can be a daunting task, but with a little knowledge and organization, it can be manageable. Let’s take a look at some tax tips for small businesses to make tax season a little easier.

Set up a system for staying organized.

As the old saying goes, time is money. This is especially true during tax season when small businesses have to scramble to make sure they’re compliant with all the relevant regulations and paperwork. Unfortunately, many small businesses don’t have the resources to stay organized during tax season, which can lead to costly mistakes.

The good news is that there are plenty of ways to stay organized during tax season. The most important thing is to develop a plan and stick to it. One important task for small businesses is tracking invoices and payments. This allows you to keep tabs on your expenses, make sure you’re being paid on time, and identify any potential tax problems. Additionally, you’ll want to keep track of all your tax information and prior taxes. You might want to consider tax return folders to keep all of your paperwork organized and together. If you have employees, tax folders will also help you sort and distribute income information. Staying organized is critical for having a successful tax season for your small business.

Pay estimated taxes.


If you are a small business owner, you may be wondering whether or not you need to pay estimated taxes. The answer is: it depends. You generally need to pay estimated taxes if you expect to owe $1,000 or more in tax for the year after subtracting your withholding and refundable credits.

Generally, you must estimate your taxes quarterly and make four payments each year: one each in April, June, September, and January. However, if you don’t owe any tax in the current year, you don’t have to make any payments. You can either calculate your own estimated tax payments using IRS Form 1040-ES or have an accountant do it for you.

If you choose to calculate your own payments, be sure to use the most recent version of the form, as the instructions may have changed since last year. The form includes helpful worksheets that will help you determine how much to pay each quarter.

Choose the right business structure.


When starting a small business, one of the first decisions you need to make is what business structure to choose. This decision will have a big impact on your taxes and how much paperwork you have to do. The three most common structures are sole proprietorship, partnership, and corporation.

A sole proprietorship is the simplest form of business structure. There is no filing required with the state or federal government, and you don’t need to create any documents such as bylaws or an operating agreement. The downside is that the owner is personally liable for all the debts and liabilities of the business.

A partnership is similar to a sole proprietorship, but it involves more than one owner. Like sole proprietorships, partnerships don’t require any filings with the state or federal government. However, each partner in a partnership should have a written partnership agreement that outlines how profits and losses will be shared, how decisions will be made, and other important issues such as the death or withdrawal of a partner from the business.

A corporation is a more complex legal entity than a sole proprietorship or partnership. It requires articles of incorporation to be filed with the state and also has formal bylaws and an annual meeting requirement. A corporate owner is not personally liable for company debts and liabilities (unless they signed personal guarantees). This can be advantageous if things go wrong in the business, but it also comes with more paperwork requirements.

Stay informed about changes in the tax law.

As a small business owner, it’s important to stay informed about changes in tax law so that you can make the most of the deductions and credits available to you. Many changes are made each year, and it can be hard to keep track of them all. However, if you’re not aware of the changes, you could end up paying more in taxes than you need to.

Staying informed will help make filing taxes easier and ensure that no deductions or credits are missed. A good tax preparer will be abreast of current tax laws and can help you find any available deductions and credits for business, as well as file your taxes in a way that minimizes your liability.

Overall, tax tips for small businesses are important in order to ensure that businesses are taking advantage of all available deductions and credits. By understanding the tax code and what deductions and credits are available, small businesses can save money on their tax bill and operate more efficiently. Additionally, staying organized will ensure that your business stays on top of all paperwork.

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