By David Stamper, NPI, Inc.’s President & CFO
As we head into February, we move one step closer to that all important time of year– tax season. If you let out a small groan every time you hear those words, you certainly aren’t alone. It can be a headache to file taxes and be sure that you do it correctly. A small mistake or simply not getting your return in on time could cost you. Nearly 10 million people each year incorrectly file their income tax form. To avoid being one of that group and paying fines, get a head start!
Know Deadlines
To avoid panicking at the last minute and trying to get your taxes in order, make sure you know when you have to file. The dates will vary depending on your business structure and if you use the calendar or fiscal year.
In the U.S.:
For more information on your state’s tax deadline, check their tax division website here.
In Canada:
More information about Canada’s tax deadlines can be found on the government website.
Keep Your Receipts
Being a business owner means you’ll now incur a variety of expenses. Travel, tools, and additional training are all purchases that you should start tracking. However, holding on to every receipt you get can be a little tedious. To make it a bit easier, opt for an app or tracking software that’ll keep a digital summary.
Separate Work and Leisure
The line between personal and professional expenses can be somewhat blurred as a small business owner. Yet, you should try and keep it as clear as possible. It’s common for entrepreneurs to mistakenly itemize something like a lunch out with friends as a business expense on their company card. In addition to making it a hassle figuring out how much you spent on the job, you could find yourself in trouble with the tax collector.
Know Deductions You Qualify For
After you’ve parsed out what you can’t write-off, it’s just as important to know what you can. For starters, charitable donations (typically over $250) are a common deductible for business owners. You can also write-off your home office as well, if you meet the right criteria (For Canada, follow this link). Don’t forget your travel expenses like gas or lodging as well.
Consider a Tax Firm
To ease the stress of tax season, you may find it optimal to hire out to an accounting firm. But before you sign on with one, do some preliminary research on them. Begin by researching what businesses they work with. It’s best to have a diverse firm, and it’s even better if you find one that’s worked with your industry and can more accurately assess your company. You should also check their fee structure so you won’t find yourself being overcharged.
This time of year can always be stressful, but a little preparation can make it a lot more relaxing!
