Tuesday, January 11, 2011

Basic tax preparation for small business owners.

As a small business owner, your focus may be on making money day-to-day. It may be hard to make time for tax preparation, or it can become overwhelming if you wait until the last minute. A small business owner can learn to do it themselves, but hiring the right people can save you valuable time and money, and avoid costly mistakes. Here are a few tips that will save you time, money, and help you to keep your focus on making money.

1.       Use a professional. Using a tax professional will ensure that you get every deduction that you are entitled to, while still keeping your books according to regulations. A tax professional will also make you aware of any rules that have changed and keep you up to date with the newest tax laws. Make sure to choose a professional that is right for your business. Trusting a professional to handle this aspect of your business could offer you larger tax savings.

2.      Know the basics. Knowing the basic for tax preparation will help you to keep the required records throughout the year, and also help you get prepared for your tax professional.

3.      Set up a filing system for all your receipts and taxable documents. There are great programs like QuickBooks, that make this very easy for small business owners. Develop a Tax Preparation Checklist with your tax professional that will include everything that will be needed for tax time. Going through your checklist monthly will keep this task to a minimal versus tackling this task at the end of the year.

4.     Keeping good books. Consider hiring a bookkeeper. The bookkeeper will record all your receipts and taxable documents, track accounts payable and receivable, and create a balance sheet for your business. A bookkeeper is going to be focused on properly recording the day-to-day financial activities of your business. Your tax professional will not be able to do their job properly without good bookkeeping and good books. Depending on the size of your business, a bookkeeper can work with you monthly, weekly, or daily.  Make sure that your bookkeeper works well with your tax professional.

Article written by Susan Miller 

- Owner and Founder of the Women's Small Business Association (WSBA), LLC.

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