Tax season is always a stressful time of year for business owners, but it certainly won’t help your case if you put off your tax planning and preparation until it arrives. You can significantly reduce your stress by using some important tax savings strategies all year long, keeping you organized and reducing your payments to the government.
Here are a few of our biggest strategies for IRS relief in Des Moines, IA:
- Always separate personal and business finances: If you don’t already have separate accounts for your personal and business finances, open up an account for your business today and use it. You should also have a separate credit card account for your business. When it comes to managing your books and getting deductions on your business taxes, this will make things a whole lot easier and help you avoid an audit.
- Use payroll software: About a third of all companies in the United States get fined every year for payroll tax errors, largely because many of these businesses try to develop their own systems for payroll, be they on paper or in spreadsheets. However, there are many types of payroll tax software available that will make it so much easier for you to complete the calculations quickly and accurately. The investment in that software is more than worth it.
- Use accounting software: Just like how payroll software makes it much easier for you to track payroll taxes, accounting software like QuickBooks makes it significantly easier for you to keep track of all your revenue and expenses. Again, using simple spreadsheets just doesn’t cut it any more—you’re much more likely to make mistakes that could cost you in extra payments or potential audits. QuickBooks and other such software is easy to use and set up.
- Hire independent contractors: Not all businesses can get away with hiring independent contractors instead of employees, but if it makes sense for your business model, try to keep independent contractors as much as possible. Most startups and small businesses can’t afford to hire many (if any) employees, because then they have to pay benefits and payroll taxes in addition to wages. This is not the case for independent contractors. Just make sure the worker meets the definition of an independent contractor rather than an employee.
- Deduct business expenses: Certain business-related expenses can be deducted from your taxes to help you save money. This includes business meals, entertaining costs, travel and gas expenses, lodging, business equipment and supplies and more.
- Choose the right structure: The way you structure your business will affect the taxes you pay. LLCs, for example, are pass-through entities, meaning all profits will be taxed at ordinary rates. However, C corporation shareholders are taxed at the corporate rate and again whenever they report distributions on their tax returns.
For more information and tips about how you can save money on your taxes for your business in the coming year, contact Accounting & Tax Professionals, PLC for help with IRS relief in Des Moines, IA.