4 Tax Preparation Tips for Small Businesses

 

Tax season is right around the corner and quickly approaching. You don’t want to wait until the last minute to file your business taxes. In fact, it’s better to plan ahead and prepare so that you know what to expect financially and are able to get your taxes done faster. Here are four great tax preparation tips for small businesses!

Hire the Right Accountant

The first thing to remember is that there is nothing wrong with seeking professional help for your business taxes.

 

The best way to prepare for tax season is to invest in an accountant before tax season so that they can assist you throughout the entire year.

 

The right accountant will do more than just your taxes, instead of working with you to track financial transactions, profits, etc.

 

A good accountant helps you properly maintain your finances the entire time so that when it’s time for tax season, everything is already organized and in place.

Separate Business & Personal Accounts

When kicking off a small business, it may seem easier to just keep those finances in your personal account.

 

However, even if you reported all business expenses correctly, the IRS now has access to your personal account.

 

They can look into your personal account because of the combined money and this could end up impacting your tax information.

Keep Financial Records

It is so important to keep track of all your business expenses, both internal and external, as you go along. If you are unsure of the proper way to keep track of your finances, a professional finance service can help.

 

Bookkeeping has been made easier due to digital software, but a professional can ensure that all expenses are accounted for and also analyze financial information to help improve your small business and keep it growing.

Claim all Income Reported to the IRS

Trying to get over on the IRS is never a good idea because they most likely have access to the information that you are trying to withhold.

 

The IRS gets a copy of the same 1099-MISC forms that you receive, so they know exactly how much income your business has made within the year.

 

They compare the amount you made to the amount you reported and if they don’t match, it’s a red flag for the IRS.

Contact PL Consulting Today to Prepare for Tax Season!

At PL Consulting, we consider our clients part of our team. We provide full financial management services including bookkeeping, accounting, payroll, tax preparation, budgeting, and more.

 

Serving the Baltimore area for several years, we are dedicated to providing customized service to fit each and every one of our client’s unique needs.

 

To book PL Consulting today or get more information, contact us at (410)-764-3731 or at https://www.plcfo.com/contact/

The Benefits of Annual Book Cleaning

Your bookkeeping records keep track of all internal and external financial transactions made from your business. Though you should be cleaning and organizing your books as you go, it is especially important to do so at the end of every year. Having a clean set of books at the start of the year allows you to analyze the financial progress of your business over the course of the year. Here are some more great benefits of annual book cleaning for your business!

annual book cleaning

Tax Preparation

One of the main reasons you should clean up your books before the years end is to help prepare you for tax season.

 

Procrastination is way too common when it comes to taxes, but the earlier you get them done, the better off your business will be financially.

 

Cleaning up your books makes it easier to determine your estimated income for the past year as well as an estimate on taxable income. Cleaning up your books before the year’s end also allows time to make financial decisions that could possibly lower your taxable income for the season.

Business Analysis

If you don’t keep your books clean and organized, it’ll be difficult to keep your business organized as well. Cleaning your books at the end of the year allows you to go back and see how much money you made and lost in the past year.

 

You can get a better understanding of what brought in more money versus what caused your business to lose money. You can analyze which sales methods were more effective, what expenses went outside of your budget, and more.

Fresh Start

After analyzing your business books from the previous year, you can now plan properly for the upcoming year. Starting the year fresh, organized, and with a plan in place will allow your business to have a strong start in the new year.

 

If you don’t have your books cleaned up at the end of the year, the start of the new year will be quite unorganized and your business may end up making the same financial mistakes as the prior year.

 

A clean set of books gives you something to refer back to without being overwhelmed and helps you to create a concrete budget for the upcoming year.

 

Organization is key to the success of any business, especially when it comes to finances!

Contact PL Consulting Today to Clean-Up Your Books!

At PL Consulting, we consider our clients part of our team. We provide full financial management services including bookkeeping, accounting, payroll, tax management, budgeting, and more. If you have questions on annual book cleaning give us a call.

 

Serving the Baltimore area for several years, we are dedicated to providing customized service to fit each and every one of our client’s unique needs.

 

To book PL Consulting today or get more information, contact us at (410)-764-3731 or at https://www.plcfo.com/contact/

4 Important Tax Planning Concepts

Tax time can be a stressful time of year for everyone, but everything becomes easier when there is a plan in place. Tax planning is a great tool to use for things like business, wills, retirement, and properties.

In short, it is a way to help figure out just how much money you will be spending on taxes per year, while figuring out the best ways to minimize your tax liability.

Here are four concepts you should know to make tax planning easier.

tax planning

1.  Tax Bracket

The first thing you need to understand when tax planning is your tax bracket. This is important because it gives you an idea of your current standing, which is vital before you can plan for the future.

The U.S follows a progressive tax system, meaning that the higher your income, the more money you pay in taxes.

There are seven general tax brackets (10%, 12%, 22%, 24%, 32%, 35% and 37%), but often times, you won’t pay that percentage on your entire income.

This is because tax deductions are taken into consideration and the government also divides your taxable income into segments before applying taxes.

2. Tax Deductions vs. Tax Credits

Both tax credits and deductions can reduce your tax bill, but they do so in different ways. Tax Deductions are expenses that you have that can be subtracted from your taxable income. Tax Credits are more beneficial, giving you a dollar-for-dollar reduction.

3. Standard Deduction vs. Itemizing

  1. Standard Deduction: A lot of taxpayers choose to utilize standard deduction because it’s a lot faster. A standard deduction is a flat rate, no questions asked deduction. The government sets an amount of the standard deduction each year and the one that you qualify for depends on your filing status (single, married, head of household)
  2. Itemize: This is a longer process, but typically ends up in more deductions than if standard is used. Itemizing means you take your tax deductions one by one. PL Consulting can help you determine exactly which deductions you qualify for and if it’s worth itemizing over using standard deduction.

4. Tax Records

A crucial part of tax planning is keeping all records of tax returns and documents. It can take the IRS up to three years to decide whether or not to audit your return, so you want to hold onto your records for at least that long.

If you’ve under reported your income by more than 25%, you want to keep your records for at least six years. If you’ve ever skipped a tax return, keep your files indefinitely.

PL Consulting for all Your Financial Needs!

At PL Consulting, we consider our clients part of our team. We provide full financial management services including bookkeeping, accounting, payroll, tax management, budgeting, and more.

Serving the Baltimore area for several years, we are dedicated to providing customized service to fit each and every one of our client’s unique needs.

To book PL Consulting today or get more information, contact us at (410)-764-3731 or at https://www.plcfo.com/contact/

Tips to Combat Smaller Tax Returns

Employees eagerly await tax season. Why? Because that’s when they get their tax refund! This year, workers have been eagerly filing their taxes only to find that they received less money than last year.

Employees eagerly await tax season. Why? Because that’s when they get their tax refund! This year, workers have been eagerly filing their taxes only to find that they received less money than last year. But why? Well, if you remember, 2017 was the year that mandated a tax reform. Tax reforms are supposed to be beneficial. The goal of tax reform is to save money. What changed this year? Payroll comes into play. The amount of money withheld from your paycheck adjusted to match the projected tax amount. Fewer funds coming out of your paycheck decreases your tax refund. Keep reading for tips on how to offset smaller tax returns.

Continue reading “Tips to Combat Smaller Tax Returns”

Tax Planning Strategies for Small Business Owners

Tax Planning Strategies
Small business owners with effective tax planning strategies will be better able to navigate shifting tax laws.

As a small business owner, you have a lot to remember. And while you’re keeping all those balls in the air, sometimes the thing that gets pushed down on your to-do list is your tax planning strategy, so that at the end of the year you’re scrambling to make some last minute tax decisions. Instead of all that scrambling, this year you should plan your budget to include some of these tax strategies made possible by the Tax Cuts and Jobs Act. Continue reading “Tax Planning Strategies for Small Business Owners”