Small businesses are vital to the American economy. Despite how vital they are, it is not always easy for small businesses when it comes to tax compliance. According to IRS research, tax compliance burden increase with the size of business, however, it is far easier for large corporations to handle due to increased resources. Because of this, unsurprisingly, tax compliance has emerged as a source of significant stress for small businesses.
The Internal Revenue Service recognizes the issue as a known problem for self-employed individuals, noting the largest source of compliance burden for taxpayers is the “overwhelming complexity of tax code.” Elsewhere in the same report, the IRS acknowledged that small-business taxpayers “face a particularly bewildering array of laws” regarding compliance.
This intricate system can often lead to unintended results. Many small business owners seek to comply in good faith and make inadvertent mistakes that may result in penalties or overpaying. On the other hand, the most sophisticated taxpayers find loopholes that can greatly reduce their tax liability.
There is no simple tax filing process for the self-employed. Which is why the majority of small business owners have chosen to outsource their taxes with small business tax compliance services.
Two ways to think about compliance.
Due to the stress tax compliance can often provide, it is common small businesses put it off until last minute. Here are two important truths you should know.
1. You don’t need to do everything. You are a professional in your field. You don’t need to also be a tax professional and it is perfectly okay if you don’t know everything.
2. You benefit from doing it the right way. Doing your taxes the correct way offers the opportunity to reduce the amount of money you give to the government. Managing your tax compliance is important to receive deductions and other items that could save you some extra money and leverage your bottom line.
Three Tips to Apply to Your Business
Put the stress aside and tackle your taxes like a pro this year. Here are three small tips that can ease the tax compliance process:
1. Keep a running record of your income and taxes paid throughout the year
Keep a record of all your taxable income in one place. It is smart to discipline yourself and set aside 30 percent of income for tax payments every single time you are paid. Consider putting that money into a separate bank account. Also, it is essential to pay your quarterly taxes to the IRS every three months like clockwork.
2. Identify all your business expenses and track them diligently
Tracking your time and money is essential to earn what you are really worth. You will also be able to see how productive you are by project or client. When tax time rolls around, you will more easily catch patterns and categorize expenses that appropriately reduce your taxable income. This includes the money spent on advertising, business supplies, business insurance, gas, conferences, services, and travel. By tracking your business expenses diligently you will have the information you need to protect yourself from overpaying.
3. Hire a tax expert to complete your annual filing.
Many self-employed professionals do not need an accountant year your to manage their finances. However, patterning with small business tax compliance services is a smart move come tax time. If you have done the work to keep track of your income, taxes paid and business expenses, a tax consultant can make the actual filing pretty painless. A tax consultant can identify potential deductions to track in the future, reducing your taxable income for years to come.
Limitless Investment and Capital’s Tax Preparation Services
You don’t have to drown in this fear. Limitless Investment and Capital’s small business tax compliance services take the stress out of complying with small business financial statement requirements. To safeguard your company, we ensure that you know what’s required of you and what you must do to fulfill these obligations. This is predicated on sound record keeping and timely tax preparation. Get in touch with a Limitless Investment and Capital tax consultant today!