Caught up in the frenzy of March Madness? Don’t forget it’s also tax season. The filing deadline is just around the corner, and while you can’t escape paying Uncle Sam, you can make sure you don’t pay more than legally required. However, because the tax laws change every year, knowing what you can and can’t write off is confusing to say the least. Some business owners miss perfectly legitimate deductions while others get creative and take more than they should resulting in potential problems down the road.
Here are a few tips.
* Get Organized Now. Don’t procrastinate. When you wait until the last minute to pull together the information you need, the greater your chances of missing something. Start by putting all your tax related documents in one place. I use transportable file box. Then once you think you have everything together, start organizing your documents by category. This will help you identify in advance what’s missing.
* Familiarize Yourself With Available Deductions. There’s no need to become a tax expert, but there’s no excuse for being a novice either. Type small business tax deductions into any search engine and you’ll find a wealth of information on the top tax deductions for your business. Familiarize yourself with what is available and appropriate for your business.
* Work With a Professional. There’s nothing wrong with using online tax preparation software, but as complex as our current tax code is, I strongly advise you to have your business tax filing reviewed by a professional before you submit it. Small businesses often miss available deductions or mistakenly write-off ineligible expenses. For example, the farmer who tried to write off his food and medical care for his toy poodle as a guard dog. Or the the professional ballerina who was surprised to learn her tummy tuck wasn’t a deductible expense. If you don’t want to hire a professional tax preparer, you can go directly to the IRS for assistance. The agency provides assistance online, by phone or in some cases through Tax payer Assistance Centers.
Failing to take advantage of legitimate tax deductions results in your business being taxed more than it should. Be smart this tax season.