Small Business Taxes: Expectations vs. Reality

1. Small Business Taxes: Expectations vs. Reality Reference Article: https://profinanceblog.com/small-business-taxes-expectations-vs- reality.html If you’re a Small business Finance owner, you undoubtedly heard about the changes to the tax code brought on by the 2018 “Tax Cuts and Jobs Act.” While this bill brought a variety of changes for small business owners, this bill has not made the prospect of completing your businesses taxes any less daunting. Few small business owners look forward to filling their assorted business taxes. But this fear can be tempered by learning about many of the contemporary policies and norms related to business tax filings. By examining the following expectations and realities of filing small business taxes, you can gain a better overview of what taxes you’ll be expected to pay as well as how you go about filing those taxes. Expectation: My Business Will Pay Taxes Once a Year Reality: Businesses Pay Taxes Four Times a Year Quarterly taxes are the norm for small businesses, meaning you’ll need to remain on your toes for filing. While this comes off as more continuous work, it pays off by spreading the tax burden through the course of a full year.

2. To make these quarterly payments easier, the IRS provides a specialized worksheet – the 1040-ES – to estimate your quarterly tax allotment. Expectation: Filling my Small Business Taxes Will Take Forever Reality: Preparation is Key Like the Scout motto, the best way to ensure a quick and accurate tax preparation process is to “be prepared.” In large part, this means keeping accurate, easy-to-access fillings of many important business documents so that you won’t need to hunt for them as you prepare. At the least, this means keeping track of: Last year’s business tax return Payroll documents Bank and credit reports Miscellaneous accounting documents However, you will also benefit from saving most (if not all) of the following documents, to ensure every expense and cent of profit is accounted for: Sales records Gross receipts Employee wages (if applicable) Contractor payments Advertising costs Office rent or mortgage Transportation expenses Even if you don’t have all of these documents this year, you can make a doubled effort to improve record keeping during the next year. This in turn will speed up your tax preparation process exponentially. Expectation: There Are Not Many Deductions for Small Business Reality: There Are a Variety of Worthwhile Deductions for Small Business

3. State and federal governments often work together in order to encourage small business to grow with financial stability. One of the ways this is often done is by providing tax deductions to cover some of the costliest aspects of running your own business. Insurance deductions are among some of the most fruitful for small business. If you pay for a business owner’s policy, health insurance, malpractice insurance, and more, you may be able to claim up to 100% of the premium cost as a deduction. Many new small business owners don’t know this, but many startup costs can be deducted from your taxes. The IRS sees these as capital expenditures, allowing you to deduct up to $5,000 or potentially more for many of the costs associated with starting a business. Expectations: I Have to Complete All of my Tax Work Alone Reality: Trained Professionals are Ready to Help At the end of the day, many small business owners need a helping hand when it comes to preparing for tax season. The Denver Tax Advisors can be that helping hand as they provide tax preparation, planning, bookkeeping, payroll, and more for your local small business. Don’t let the upcoming tax season scare you! Turn to a team of tax professionals who can help you every step of the way. To know more visit: https://profinanceblog.com/