How to Prepare for Tax Time as a Business Owner

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No matter how successful you are, getting a good start with your tax prep will make you or break you. If you go in frazzled and disorganized, then chances are that’s exactly how you’ll feel when it’s all over. But if you go in with a positive attitude and a willingness to take things step by step, you’ll feel a lot better throughout the process.

MasterPay USA fully understands the frustrations that business owners encounter with tax prep, and we’re here to help. In addition to offering a range of payroll services for business owners, we hope the following guidance can smooth out some of the bumps in the road.

If you’re opening a small business, you might be wondering what you can do to reduce your tax burden. Structuring your business as an LLC is one smart solution. By forming an LLC and registering your business with your state, you can qualify for startup deductions that you might not have been eligible for otherwise. In the long run, you might also be able to lower your state and federal tax burden.

Wondering how to go about forming an LLC? If you have a lot of questions about the process, such as how to set up your EIN registration, you may want to check into an online formation service. And if you need assistance filing taxes as the owner of an LLC, you’ll want to make an appointment with an accountant.

Also be cognizant of the cyber security threat as it relates to taxes. Due to uncertainties surrounding tax filings, small businesses are especially vulnerable to attack, notes Payments Journal. Protect your business by taking steps like setting up a firewall, have an incident response plan in place, and outsource cyber security services as a safety net.

It’s an overwhelming task to put everything in order for an entire year, but it has to be done, so rather than put it off, start small and work up from there. Organize all your receipts and gather all the paperwork you need for tax preparations. Sort everything into categories and keep them in separate envelopes.

Tax time is stressful for them, too. Remind employees and independent contractors about upcoming deadlines and do your part to help them prepare by making sure they receive their W-2s or 1099s in a timely manner.

What new items were purchased over the past year? New desk chairs? A conference table? Maybe a coffee maker for the breakroom? Always track these kinds of additions throughout the year. SCORE confirms that they’re tax deductible and can give you a break when included in your tax return. If you didn’t keep up with last year’s upgrades, now’s a good time to do an inventory of the office and start gathering receipts.

Getting enough rest, eating well-balanced meals, and exercising daily will go a long way toward helping you feel good during the long days ahead, but you also need to make sure you do something just for yourself. Many business owners have a hard time finding separation between their work life and their personal life, and tax time won’t make finding balance any easier. It’s important to make time for things you enjoy. Turn off your phone and hit the gym, have a long lunch with a friend, or curl up with a good book. Prepping for Uncle Sam doesn’t mean you can’t take a break here and there.

As you go through the process of prepping this year’s taxes, set some goals for next year. For example, maybe you can revamp your filing system to make organizing the year’s invoices easier. Or maybe you can incorporate a helpful app, such as a mileage tracker, into the way you work so that you can keep a more accurate record of how you’re doing business. These small changes can make a big difference in your tax prep and can be quite profitable.