There are simple but noteworthy tips to save on 2019 taxes for your small business. As a Broken Arrow, Tulsa, or Northeastern Oklahoma small business owner, familiarizing yourself with these fundamental tax basics will help position you to save on next year’s taxes. The time to prepare your business finances for next year’s taxes is now.
A new year brings opportunity for new resolutions, so in 2019, why not plan ahead to simplify tax time? Here are some strategies for success on your small business taxes for 2019:
1. Schedule your tax deadlines ahead of time for the whole year
On January 1, go through your 2019 calendar and mark each and every tax deadline so you don’t miss any.
- Form W-2 and Form 1099 should be mailed by January 31 each year, and to the Internal Revenue Service by February 28 each year.
- Estimated quarterly tax payments are due April 15, June 15, September 15, and January 15 of each year.
- Business tax returns are due March 15, while individual returns are due April 15.
- Payroll tax forms are due to the Internal Revenue Service on April 30, July 31, October 31, and January 31.
- There may be additional state deadlines that need to be followed, so consult your small business tax service to verify you don’t miss any deadline requirements.
2. Divide your business expenses from your personal expenses
Create a separate bank account and credit card account for your small business in order to keep transactions separated and your taxes accurate. Too many business owners mix their business and personal finances, and that’s not wise or efficient. When you simply divide the two entities, you’ll find it actually simplifies your ability to keep track of business finances, and you will likewise be better prepared to meet tax requirements. When business expenses are separated from personal ones, you will find it is easier to:
- Track all your business expenses
- Stay organized in order to be better prepared for tax time
- See at a glance the transactions into and out of your small business account
- Avoid the possibility of forgetting what you bought for your business (with money from your personal account)
- Ensure you don’t miss your opportunity to cash in on any tax deductions
- Save time in the long run
3. Save receipts starting January 1 of every year
In order to take advantage of all the small business tax deductions, you’ll have to make it a habit to save every receipt. What you spend can add up to great deductions—if you have the receipts. Decide on the best method to save every receipt so you don’t have to go on a treasure hunt each year. One approach could be to keep a distinct zippered pouch in your purse, car, or desktop drawer and drop receipts into it each month. As the month concludes, take photos of the receipts and upload them to one location. Evernote or cloud-based software are reasonable places to upload receipts. Create a monthly itemized report of your expenses to keep it organized, and you will be well prepared for tax time.
4. Track business mileage accurately
Beginning January 1, track all your business miles and take advantage of tax deductions as a result. Establish a workable system so you don’t miss out on any business mileage for the year.
5. Don’t make assumptions—hire an expert!
Tax rules change annually, so it’s unwise to assume anything regarding small business taxes. Develop a relationship with a well-informed tax professional who understands the nature of your business and also stays current with tax changes.
The latest tax bill brings sweeping changes to small businesses and families. Now more than ever, it’s important to hire a tax professional to help you prepare and file your taxes accurately. Plus, a qualified expert can advise you on possible changes you can make to set your business up for better success in the following years.
6. Invest in good accounting software to track income and expenses
Some cloud software programs are updated regularly to stay current with Internal Revenue Service rules. Save time and make tax time easier by staying up-to-date with your small business finances and uploading them into the cloud. Create reports easily, and use the data to influence the execution of your business plan.
7. Steer clear of costly tax audits
Audits place a tremendous drain on your valuable time. The audit process is tedious, and although you may not owe more money after an audit, the audit process costs precious time. Areas small businesses need to exercise caution to avoid tax audits include:
- Home office deductions
- Business mileage
- Large miscellaneous deductions
- Employee classification