As a small business, it is essential to stay on top of your taxes. This is not something that you should cram into the end of the year; this is something that you should address on an ongoing basis.
1. Hire An Accountant
As a small business, don't feel like you need to take on your taxes on your own. Your taxes are complicated, and getting them right is essential to the success of your business – which is why you are going to want to hire an account. An accountant will be able to help you track your spending and income throughout the year and can help you with more routine tasks such as payroll as well. You need strong accounting throughout the year, not just during tax season. If you want your business to succeed, you need to be tracking your money throughout the year.
2. Claim All Income
Second, as a small business, it is important to claim all of your income. You may be getting income from different sources, so be sure to collect all of your 1099-MISC forms throughout the year. The IRS is going to check your 1099-MISC forms and ensure that they are reported on your income. If you make money from a client, be sure to claim that income properly.
3. Keep Business & Personal Separate
Third, one of the most classic mistakes small business owners make is combining their business and personal income. You are not going to want to combine your business and personal expenses together. The best thing you can do is keep separate bank accounts for your personal funds and your business funds and use different credit cards. Give yourself a regular paycheck; don't dip into your business checking account or credit cards for your personal needs, and vice versa.
4. Get Your Business Classification Right
If you have not thought about how your business is classified, sit down and work on your classification. When you first start out, being a sole proprietor can work well. However, as you start adding employees and taking on clients, you may want to reclassify your business into a Limited Liability Company, a Limited Liability Partnership, S Corporation, or a C Corporation. Having your business classified correctly can have a significant impact on what you pay in taxes.
As a small business owner, you should find an accountant to work with, as they can help not just with taxes but with your financial concerns throughout the year. You need to keep your personal and business expenses separate, get your business classified correctly, and be sure you claim all your income.
For more information about business tax preparation, contact an accountant in your area.