April 17 Tax Day for 2018

Taxes are Due April 17: Are You Ready?

Tax season is drawing to a close, leaving many entrepreneurs and sole-proprietors rushing to gather the last-minute details that are needed for the filing. This time of year can be stressful if you haven’t been consistent with your expense and income tracking throughout the year. But, there is still time available to gather the information that is needed for taxes so that you can optimize the results of your tax filing.

Why April 17th?

Usually, tax filings and payments are due on April 15th, so why is the due date different this year? If April 15th falls on a weekend, then the tax day will be adjusted to a weekday. This year, the 15th falls on a Sunday, so the IRS adjusted the due date to the 17th instead. Now, everyone has two business days after the standard due date to finish up the filing details and submit all of the paperwork and payments.

Even though you have an extra two days this year, don’t delay the preparation of your paperwork and payments! It is important that you take action right now so that you aren’t pushing the deadlines as the final due date approaches.

In fact, it is often a good strategy to finish your paperwork in advance. Then, you can relax at the end of tax season knowing that everything is already done.

What should you be focusing on to prepare for your tax filings? Here are a few things that you need to do to make sure that your small business is ready for tax time:

Gather Deduction and Write-Off Details

One of the benefits of owning a small business is that you can maximize the deductions and write-offs that are related to business expenses. Any time you spent money that has an impact on your business activities, then that cost can be considered a write-off.

But, these transactions aren’t beneficial for your taxes if you don’t track the expenses. Keep a record of the costs that were incurred throughout the year. Then, this information needs to be provided to your accountant to ensure that everything is included in the right categories on your tax paperwork.

Common write-offs include office supplies, computers, cell phones, inventory, contractor work, website maintenance, and more. If you have a home-based business, then don’t miss the benefits of writing off a portion of your rent or mortgage, as well as some of your utilities. Your accountant can help you determine the right amount that needs to be written off for these payments.

Even the smallest write-offs can add up to big savings in the future. Make sure to maintain a conversation with your accountant with anything that could be used as a write-off. For example, you might consider tracking your miles to use the travel as a write-off. Anytime travel or entertainment is needed for business purposes, a portion of the food, tickets, and hotel can also be used to reduce your tax burden.

Keeping track of all of the money that is spent will add up to a significant tax benefit over time. If you don’t already have records to provide for your accountant, then right now is a great opportunity to gather the details for the upcoming tax filing.

DIY vs. Professional Tax Filing

Start-up business owners are always looking for ways to save money. Even though it might sound like a good idea to use software for DIY tax preparation, it is common for inexperienced business owners to make huge mistakes with their paperwork. One missed line item or mistake in the way the information is entered could change your tax liability by thousands of dollars.

Yes, you will need to spend a little money for assistance with your tax filing. But, these services are invaluable when you compare the amount of money that is saved from professional tax preparation. Spend a little bit of money right now so that you can improve your tax strategy and save a lot of money on the taxes that are due.

Also, consider the benefit of having ongoing tax support throughout the year. You should be talking to your accountant more than once a year. Most business owners turn to financial professionals when the tax due dates are looming. It is a mistake if you aren’t leveraging their knowledge and tax strategy throughout the other months in the year though. For example, you might adjust your budget or the spending cycle to manage your tax bracket. Keeping your income in a lower tax bracket can be a big deal if you want to save a lot of money on taxes.

Don’t overlook the benefit of reduced stress levels when you have an experienced tax professional handle the filing for you. Instead of spending your evenings and weekends stressing over tax preparation, you can relax and enjoy time with your family. Your accountant will handle the paperwork and number crunching, helping you achieve the best results that are available from your tax filing. You can relax and watch your stress levels drop when you don’t need to worry about these details by yourself.

Employees, Contractors, and More

As you are calculating expenses, it is important that you distinguish the differences between employees and contractors. When a person is on your payroll, there are specific payroll taxes and other costs that need to be calculated every time a check is cut. Then, these costs need to be paid to the government at certain times throughout the year. At the end of the year, the totals need to be calculated and reconciled, ensuring that the right information was submitted with the payments.

In comparison, a contractor is paid without the burden of employee taxes. You can cut a check to the contractor to pay for the invoice, without a need to subtract a certain percentage for taxes that need to be withheld for the payments.

Both employees and contractors should receive tax forms at the end of the year if they were paid $600 or more in a given calendar year. Employees should receive a W2 that outlines their payments and taxes that were withheld. Contractors need to receive a 1099-MISC form. Missing these payments and forms is a common mistake that could impact the legality of the people that you hired.

Implement a New Tax Strategy for Next Year

If you found that tax preparation was too stressful this year, then it might be a sign that you need to implement a new tax strategy. Consider the option to wait until the dust settles after tax season is over. Then, you can schedule a time to talk to your accounting team about new systems or strategies that need to be used for the new year.

Most accountants are quite busy through tax filing day, and even a little bit after tax season is over due to extensions. But, there is plenty of time to discuss proactive strategies after April 17th. You need to have a good relationship with your accountant so that you can tap into their expertise throughout the year. Ask questions to learn about tax strategies. Look for solutions so that you can apply these new techniques in your business.

Go Digital

Are you still collecting receipts in a shoebox or filing folder? These old-school accounting practices are outdated and inefficient. As a result, tax season can be a nightmare if you are sifting through the paperwork to double-check the data-entry.

Instead of creating more work by managing manual accounting transactions, look for ways that you can digitize the system. Using a good software program is a great option to simplify the ongoing workload and ensure that you don’t miss important transactions. Recording everything electronically means that your expenses archive will be ready when it is time to file taxes next year.

Many of these accounting systems are designed to enter transactions automatically based on the line items that move through your bank account or credit card statement. You can set up filters that categorize certain transactions automatically. For example, a transaction from Staples or Office Max is always categorized as office supplies. Then, a few manual adjustments will be needed for uncommon transactions, such as a one-time plane ticket purchase for a conference that you are attending.

Working with an Accountant is a Valuable Way to Improve Your Business

If you aren’t already working with an accountant, then it is essential that you step into the wonderful world of outsourced accounting. These services give you access to top-notch financial guidance and recommendations, without the need to spend money on another employee. You will notice a big difference in the profits and success of your company when you are leaning on the expertise of an experienced financial team.

Are you ready to learn more about the benefits of tax preparation services and ongoing financial advice? You need to discuss the available services with our team here at Easier Accounting. We specialize in accounting services for small businesses and entrepreneurs. Our team understands the challenges of starting a company, so we are here to assist with your tax preparation and financial strategy. Call to learn more: (888) 620-0770

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