The New Year is just around the corner and business owners probably have a lot to plan. One thing that should be on top of your mind is taxes, even though the tax season is a few months away right now. Still, some good planning and smart thinking can do you a lot of good when it comes to being prepared for the next season. Being ready will keep you stress-free and leave a lot of time to handle the more critical aspects of the business. Moreover, it enables you to be on track of the IRS guidelines so that you do not face any hassles later on. Here are some useful tips to get your business up and ready for the upcoming tax season.
Start by getting organized
First things first, you should start by getting organized right now if you want to reap the benefits of this approach in the tax season of 2020. Have all the income and expense sources recorded in print or digital formats. Proper records not only enable you to calculate taxes easily and correctly but help you claim legitimate deductions as well. The IRS will be satisfied with the numbers if you have a record for everything.
Track deductible expenses
As said before, deductions are vital for any taxpayer because they help you reduce your tax burden. Keeping track of the deductible expenses should, therefore, be a part of your tax season preparation plan. Have a list of legitimate deductions ready according to the latest reforms so that you are not on the wrong side of the regulations. Deduct only a permissible amount. For example, a tax reform allows businesses to take only 50% deductions for meal and entertainment expenses related to the employees and clients, in comparison to the 100% deductions which were allowed previously.
Pay an estimated tax amount
Business owners should pay quarterly estimated tax payments in a year. So you should be ready with the current quarter’s payment before the next season is here. The estimated amount is calculated by taking into account the expected elements such as adjusted gross income, deductions, credits, taxable income, and more. Mostly, business owners use the records of the previous year to determine an estimated tax amount. Paying estimated tax is a good idea for streamlining the tax payment process and reducing the overall efforts and time.
Ensure compliance with tax reforms
Tax reforms define the way taxes are calculated and paid. It is, therefore, imperative to be aware and stay compliant with the latest tax regulations and reforms. There have been instances where businesses got into a fix even after managing their taxes properly, just because they did not comply with the IRS norms and guidelines. This can subsequently lead to an IRS penalty. The best thing to do is to consult an expert IRS tax attorney to guide you. Before you prepare for your return, get a clear picture of the current tax reforms that you need to stick with.
Be ready to file and get refund electronically
As the IRS offers automated services for taxpayers, a vast majority of them are more than keen to use these services. Electronic filing is quick, secure and boosts the accuracy of tax preparation. Additionally, it also enables you to claim your refunds more quickly. What’s more, taxpayers with incomes below $66,000 can have access to free electronic filing programs. So, electronic filing should be a part of your strategy for gearing up for the next tax season.
Seek professional help
Although following the aforementioned tips can surely help you plan and manage your taxes before the next season, you cannot expect to achieve perfection with them. There are chances that you may make an error with deductions or tax calculations. Missed deadlines are another common concern for business owners. You can reduce this risk significantly by seeking professional help to manage your accounts and taxes. A certified accountant is the best person for this job. Alternatively, you should seek assistance from a tax lawyer if you expect an IRS notice in the next season.
While collaborating with a professional means that you have to spend some money now, this decision can save you from a lot of hassle. Being well prepared is always a smart approach, particularly when you are dealing with the tax authorities. It will keep you on track and the chances of an error are reduced to the minimal. Moreover, you will be stress-free enough to focus on the extensive growth of your business in the coming year.