Entrepreneurs have a lot on their plates. Managing an emerging business is tough work after all. The imposition of taxes and tax-related work on the already populated schedule of an entrepreneur who is hard at work can be demoralizing, if not devastating.
Frankly, tax obligations are rarely, if ever, anyone’s cup of tea. A complex list of requirements, intricacies, and forms to handle further enhances the dysphoria. Alas, most entrepreneurs faced with taxes could do well with a few simple tricks and tips to help them navigate the troubled waters of tax filing so that they can get right back to what they would always rather be doing instead – building their businesses.
Tax filing time is bound to come around each quarter, so a collection of tips for streamlining your filing efforts is always good to have on hand. In this article, we will present a series of pro tips to help you do just that. Additionally, we will get into the types of software solutions that are available at the moment that actually caters to entrepreneurial tax filing needs.
Divide and Conquer
This first tip is essential to adhere to if you are serious about permanently improving your business’s tax situation. You will need to keep your accounts separate from one another. Traditionally, this involves separating your personal accounts (from whence you spend money to provide living essentials and luxuries for yourself) from your business accounts (which contain the funds that your business accrues throughout the year). However, this concept can actually be taken further if necessary with separate accounts for purchasing and income to make sure that your monetary information is as easy to keep track of as possible.
It is a known fact that distinct entities are subjected to significantly different tax obligations. It can be very beneficial, therefore, for you to incorporate your business as opposed to remaining unincorporated from a purely tax-related perspective. Partnerships, C corporations, and S corporations are not required to submit certain records for their income (like balance sheets) unless it surpasses a certain threshold (usually somewhere above $200,000 in receipts and $1M in assets).
Similarly, LLC’s taxed as partnerships get to skip self-employment taxes altogether (self-employment taxes being the combination of Medicare and Social Security taxes).
Do Not Forget the Details
This tip is especially useful because of its relative simplicity and potential effects. Detailed reports are known to be audited far less often than their less detailed counterparts. The more detailed of an account that you can keep of your businesses revenue movements, the better your chances are of avoiding costly and time-consuming audits. On top of this, more detailed accounts tend to translate to more tax refunds and deductions.
Spend at the End
This is a particularly ingenious way of bringing down the total amount that you are obligated to pay at the year’s end. In essence, all you need to do is save a reasonable amount of your necessary office expenses and purchases for the end of the tax year so that their documented existence can serve to bring your tax debt down. Charitable purchases can be worked into this last-minute spending spree along with certain retirement investments as well.
Finance and Accounting Software for the Job
There are a number of useful software solutions that entrepreneurs faced with taxes can make use of to assist in a lot of the important, but redundant year-round documenting work that must be done to minimize accounting issues when tax season swings around. Finance and accounting suites all come with plenty of powerful tools that can help you to efficiently handle your tax obligations each year. In particular, Bright Pearl should appeal to retailers for this and other aspects of business management, whereas solutions like Epicor incorporate financial tools into a general purpose ERP suite.
Entrepreneurs and tax will forever be forced to commingle when the filing season rears its ugly head. The best possible thing any savvy business builder can hope for is a good execution plan to speed up the process as much as possible. The less time you spend pushing papers to fulfill your duties for the government, the more time you will have to dedicate to the blossoming business that makes it all worthwhile. Keep the tips that were mentioned here in mind when you begin your filing endeavors and you should be able to keep your tax processing time to a minimum.
Finance and accounting software abound on today’s digital marketplace, but it can still be difficult to locate usefully and relevant solutions for your company without knowing exactly what to look for. If this sounds like a reference to the boat you happen to find yourself in, then take a moment to look into the software solutions that were mentioned within this article. They can significantly ease the overall burden that tax obligations place on your shoulders without getting in your way in the process.