Tax season is a stressful time for everyone, individuals and companies alike. But with good organization, careful planning and a little awareness of the latest business tax trends in 2013, the ordeal becomes just a bit easier. There are a number of things small businesses can do to better handle the pressures of tax season. Here are a few financial tips to help you survive the wrath of the IRS this spring.
Staying organized is key
This one is important year-round – whenever a document comes across your desk that might be relevant come tax season, file it away. Have a folder, or a drawer, or even an entire cabinet devoted to tax documents. Contracts, expense reports, receipts and bills all might come in handy later, so keep them around, and make sure they're well sorted for easy access later.
It's good to have up-to-date contact information on all contractors on your tax forms. Keep names and addresses on file and be ready to list them.
Be aware of possible deductions
There are a lot of possible tax deductions available to small businesses. If your business has spent a lot of money investing in new equipment, or donating to non-profit organizations, for instance, those expenditures may well be deductible. Be familiar with the rules on what's deductible and what's not. And if you don't understand them, don't give up – contact a tax professional who does. Your expenses will be repaid many-fold in the long run.
Consider using mobile apps
Mobile solutions are making everything easier these days, so why not taxes? Almost every major tax institution has a mobile site or app now – the IRS has an app of its own, and TaxAct, TurboTax and H&R Block are all optimized for easy mobile use as well. Smartphones can be used for accessing tax forms, organizing files, filing returns and more. If you want to work on those taxes "on the go," that's now an option.
Be familiar with the changing tax code
This is a big one. The Small Business Jobs Act of 2010 was a beneficial piece of legislation for many American small business owners – it included many provisions designed to encourage investment and help entrepreneurs access capital. But it also threw a whole lot of curveballs tax-wise, and it takes time to sift through all the rules and make prudent decisions.
For example: Section 2031 of the tax code now allows for an increased level of deduction for startup expenditures. The IRS permits deductions of up to $10,000 for startup costs, but there's a dollar-for-dollar reduction of that figure if startup expenditures exceed $60,000. There's a large stack of forms that accompanies this deduction, so if you're investing in a new venture and want to reap the tax benefits, be ready to do some paperwork.
There's also a new provision for the self-employed. In the past, there have been no allowances for self-employed workers to deduct the costs of their own health insurance when calculating self-employment tax. But under the new legislation, business owners can deduct healthcare costs for themselves and their immediate families – but beware, there are restrictions, and it requires a lot of patience to wade through all the fine print.
Tax season is no fun for anyone – it's stressful, it's full of nitpicky rules and it requires the utmost organizational skills. But with careful planning, financial savvy and maybe a little help from technology, all small business owners have what it takes to pull through and make it past April 15 alive.