If you’re yet to file your taxes, you’re not alone. One in seven Americans files their tax return in the week leading up to the deadline. With April 18 fast approaching, I’ve put together some last minute tips for small business owners running the clock, as well as advice on how you can prevent the last minute scramble next year.
1. Apply for an extension
If you’re really struggling to cross your T’s and dot your I’s, you do have the option to apply to the IRS for a six-month extension. Beware that this doesn’t circumvent paying taxes owed before the deadline, you will still need to send payment of your estimated tax bill to the IRS by April 18. While you’re not completely off the hook, extensions are generally granted automatically, so you will very likely have a bit more time to get things finalized.
2. Hire a tax professional
Everybody needs a helping hand, especially small business owners who are notorious for wearing many hats at once. Finding a trusted accounting professional that can help advise you on all the latest tax laws – especially now that the current administration has outlined their new tax policies – will be extremely beneficial now and in the coming tax years. The Xero Advisor Directory has a treasure trove of taxation professionals for you to chose from.
3. Capture the right deductions
Applying for the right deductions is important not only to ensure you’re getting the maximum possible refund but to prevent any costly mistakes. For example, new computer or office equipment purchases are important tax deductions. Also, if you operate your business out of your home, there are very specific rules for deductions on home-based businesses; all reasons why it’s extremely beneficial to work with a tax advisor who can set you up for success and help you avoid an audit by the IRS.
4. Move to the cloud
If you haven’t already, I highly recommend that small businesses move their accounting software to the cloud. Online accounting software like Xero makes accounting much easier for businesses – especially at tax time. Xero automates the manual busywork a small business owner would usually have to contend with, such as reconciling your books and managing your cash flow. Xero’s comprehensive ecosystem of apps can do everything from help you capture your expenses to file your sales tax throughout the year. Every little bit of help counts!
Once you’ve filed your taxes, there’s no better time than now to be proactive and start planning for the coming year. A cloud accountant will not only be able to set you up with the right accounting ecosystem but educate you on how to take better advantage of tax benefits next year. Their expertise will pay for itself numerous times over, and your business will be better off for it.