Small Business Tax Planning

Small Business Tax Planning: How Can It Benefit You?

Doing your taxes as a small company owner might feel a little intimidating, especially as tax deadlines get near. Naturally, you want to avoid getting into trouble with the Internal Revenue Service, but you also want to make sure you aren’t overpaying taxes. There is no doubt that you don’t want to commit any errors that the IRS could find out about.

Making sure you are prepared to file with the tax and accounting services as tax season draws closer is the greatest way to keep the IRS pleased (and off your back). Get organized and make a list of everything that must be done to prepare for tax season.

This is a helpful checklist to ensure that you are prepared for tax season, both personally and professionally.

Choose Your Tax Form and Due Date:

Not every company is made the same. Everyone must pay their fair share, but how and when you must file depends on the sort of business you have.

It’s important to note that if April 15 or March 15 comes on a weekend or a government holiday, you do receive a temporary delay. Taxes are payable on the next business day.

Collect Company Records:

Be ready to invest some time in this part of the Tax or GST filing Singapore prep process. It’s just that this is the phase where precision is most crucial.

If you have been on top of your bookkeeping during the year, gathering these documents should be rather simple. Just run the reports through your accounting program, then print them.

It will be additional labor if you neglected bookkeeping in favor of other business priorities. On the plus side, you may take advantage of this hunt for documents to select a fantastic bookkeeping or accounting system to employ moving forward.

You’ll Need These Items to File Your Company Taxes:

  • Your federal tax identification number
  • Your company’s financial statement
  • Having a balance sheet
  • All company receipts, including those for monetary transactions
  • Your company’s bank records
  • If a specific company bank account hasn’t yet been created, your bank statements will do
  • Statements for credit cards
  • Payroll records
  • Your prior year’s tax return
  • The total amount of yearly projected tax payments

After assembling your supporting documentation, it’s time to compute the numbers. Nevertheless, if you’ve been doing regular bookkeeping all year, double-check your calculations.

Determine Tax Credits and Deductions:

Give yourself plenty of time to locate, organize, and calculate any potential tax deductions and credits you could have because a business income tax return is different from an individual tax form.

Although tax credits and deductions can greatly reduce your tax liability, you should pay close attention to them as the IRS also pays close attention to your business’s tax deductions and credits. Regrettably, this is a situation where some dishonest business owners may become a little inventive.

Also Read: How to Avoid the Common Business Plan Mistakes and be Successful

In particular, there are a few things that require additional attention. Spend some time making sure these data are accurate and that you have supporting evidence.

Business Travel:

You can write off your business-related driving expenses. Be sure that the mileage you are recording is solely related to your professional obligations and not any other types of work.

Office Deduction at Home:

The expenses related to a room in your house that is exclusively (not only partially) used for business purposes may be written off. But, take care when determining this area because it is a frequent IRS trigger and may lead to a tax audit.

Deductions for Entertainment and Travel:

You can write off entertainment costs from your company taxes if you travel for business or host clients or staff as part of your firm. If your travels involve both business and leisure, be sure to break out any expenses into their respective categories.

Tax Credit for Small-Business Health Insurance:

You can be eligible for the health insurance tax credit if you pay for employee health insurance.

Accessibility Credit:

You can be eligible for a tax credit for handicapped access if you’ve made access for employees with impairments.

Deduction for Charitable Contributions:

You can claim a tax deduction for any charitable contributions your company made throughout the year. Once more, be careful to double-check your records since charity donations might start an IRS examination.

Make an Anticipated Tax Payment Deduction:

You probably paid small business taxes all year long, depending on the kind of your firm and your income.

Self-employed business owners are required to spread out their expected tax payments over the year. It’s possible that additional business owners paid their quarterly taxes.

Don’t forget to subtract the funds you’ve already submitted to the IRS to pay taxes. You shouldn’t pay more in company taxes than you have to.

If Necessary, Request An Extension:

It might take a lot of time to prepare corporate taxes, but accuracy is crucial. It’s crucial to comprehend the procedures needed to appropriately file your small company taxes and complete the necessary documentation. You can ask for a company tax return extension if you are unsure that you will be able to file your taxes on time and the deadline is quickly approaching.

Making the error of believing that an extension offers you more time to pay is incorrect. When you request an extension, you must pay any taxes you may still owe. You risk accruing fines and interest on any unpaid taxes if you don’t.

Make a Federal Tax Obligation Plan:

Look at the financial results while you complete your tax forms. What much of company taxes do you owe? How will you pay now, then? You ought to have already paid a sizable chunk of your tax liability throughout the year if you calculated your projected payments accurately.

Yet, there’s a possibility that the final price you’re considering is higher than you can manage to pay in one lump amount. If that is the case, you do have choices, such as payment plans, from the IRS to pay your taxes. Moreover, you might be able to work out a temporary postponement of your tax liability or an agreement on a settlement.

Examine Your Tax Documents:

You will be the second pair of eyes on the figures if you have hired an accountant to prepare your taxes. A study of the statistics and paperwork that have been created for you is advised. Your signature and their PTIN, or preparer tax identification number, will be included in the filing.

Congratulations if you finished your tax forms—that’s a lot of work! Nonetheless, it could be beneficial to pay a CPA, an accountant, or a tax expert to analyze them on your behalf.

Although bookkeepers seldom create tax papers, they might be able to double-check the figures on the original company forms you used to create your tax records.

Submitting Your Taxes:

The last step can be the simplest. Once your tax forms have been produced, reviewed, and double-reviewed, it is time to submit them.

Particularly if you’ve utilized tax preparation software, the IRS method for electronically submitting company taxes is pretty easy. The IRS can readily verify receipt of the paperwork when you submit them online.

The registered agent you have been dealing with may also submit your finished taxes on your behalf.

You can also send in your tax return; just make sure the postmark is made on or before the due date.

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