Yes. Talking about taxes in July. You should be. Managing taxes, preparing for taxes, estimating taxes is a year round concern for small business owners.
For the first time in four years, taxes and regulations replaced sales generation as the top reason small business owners suffer sleepless nights. According to the National Federation of Independent Business’s (NFIB) most recent survey, business owners are less concerned with poor sales than with rising taxes and health costs –not by much, but taxes are in the lead. All these issues are actually intertwined, as rising costs of all kinds will have a negative impact on profits.
So if you’re one of the 27 million small business owners looking for a reason to stay optimistic, what steps should you take to feel more in control? Perhaps going straight to the so-called source of pain might be in order to see what they, the government, would suggest.
During an interview between the Small Business Administration and Thomas Oschenschlager, VP of Taxation for the American Institute of CPAs, the following tips were offered up:
Get Your Books and Records in Order
“Do not pay a professional to sift through a whole bunch of books and records,” says Oschenschlager. He suggests a year-round strategy to organize receipts, invoices and additional documents versus waiting until just before tax time.
Understand Tax Benefits of a Home-Based Business
Oschenschlager notes “If you have an area dedicated in the house to your business, you can take a proportional amount of the expenses for the house, based on the square footage of this dedicated space.” While utilities are typically the largest expense, roof repairs and other maintenance may also qualify as expenditures. Good news for the 52% of small businesses in the U.S. that are home-based.
Deposit Your Payroll Taxes
“If you have employees, or even if you and your spouse are the only employees, make sure you pay those payroll taxes, because there is joint and several liability on payroll taxes.” Oschenschlager adds, “If the company does not pay them, then the owners of the company are directly responsible.”
Other questions to consider include those offered up directly from the IRS:
- Is your business a hobby or truly a business?
- What type of structure is your business on a federal level?
- Have you consulted your State and Local Tax Guide?
And if you’re still in the dark, consult the A-Z Index for Business to discover answers to most any tax question, as well as finding a way to get a better night’s rest. Commit now, in July, to making next year a “low stress” tax season.