Tax season can be an overwhelming time, especially for new business owners, but there are steps you can take to make filing easier! Here are five tips to help you prepare your small business for tax season and make filing as seamless as possible:
- Make sure your business is classified correctly. There are several business structures to choose from, such as sole proprietorships, LLCs, and corporations. The types of taxes that you will have to pay, and the specific forms you need to file, can differ based on your business classification, which is why it’s important that your business is classified and registered correctly. Otherwise, you may be overpaying or underpaying your taxes.
- Separate your business finances from your personal finances. If your business finances are mixing with your personal finances, calculating your taxes can be extra frustrating. The best way to keep your finances separate is by having a dedicated business bank account so that your business finances are organized and easily accessible in one place. Digital accounts, such as Grasshopper’s Innovator Business Checking, allow you to keep your finances organized while also offering convenience and helpful accounting tools with no extra fees.
- Keep adequate records. It’s very important to have adequate records of every business transaction. Having adequate records will help ensure that your tax return is correct and lowers your risk of being audited. Using accounting software can help automate your bookkeeping, making the process easier for you. With an Innovator Business Checking account, you can seamlessly integrate your account data into Quickbooks, one of the top accounting softwares available for small businesses.
- Know what needs to be filed. You’re probably used to filing a standard tax return form for your personal taxes, but when you’re a small business owner, there are several tax forms required to report your business income. This can vary depending on your business classification and/or the industry you are in. To make sure that you know exactly what forms are required for your business, refer to the IRS requirements and consult with a tax professional.
- Hire the right accountant. If you don’t have a full understanding of your taxes, it’s always best to seek help from a professional. A good accountant will work with you throughout the year to track your profits, make sure you have good cash flow, and even offer advice on how to grow your business.
At Grasshopper we pride ourselves in offering a variety of digital banking tools to help business owners save time and money. With Innovator Business Checking, not only can you bank with confidence knowing that you’re in control of your finances, but also you have dedicated support from product experts willing to give your business the personalized attention it deserves.
By Michaela Lenahan in Small Business