Filing your taxes shouldn’t cause a headache.

The last thing you want to feel is stress when tax time rolls around. That’s why, given all the paperwork, documents, and information that needs to be gathered, the preparation should begin far in advance. If you haven’t begun this year’s prep, don’t stress – that’s why we’re here to help.

We’re the experts when it comes to all things business tax so we’ve outlined the four most helpful tips below.

1. Review Your Terms

As familiar as owners may be with tax terms, it’s a good idea to review some of them before filing. That’s because some of the terms that are used can be tricky to understand. Failing to have a grasp on their definition can result in incorrect claims.

For example, revenue (as defined by the IRS) refers to the total amount of money earned solely through product sales. But, COGS (cost of goods sold) will also need to be claimed and refers to something different. This amount refers to the cost of producing those products for sale.

And, it’s important that these amounts are not mistakenly calculated seeing as gross profit costs will need to subtract the COGS cost from total revenue. 

2. Claim Depreciation

As a business owner, one of the first things you should be doing come tax season is to review the list of deductions you’ve applied for. Not only do these deductions add up, but there are plenty of benefits you could be eligible for that you might not have known about. For example, things like tools, software, and other equipment.

One deduction that many owners aren’t familiar with is Section 179 of the U.S. internal revenue code. This section is specifically designed to provide an expense deduction for purchases of depreciable business equipment (for example, things like software, electronics, and even cars).

Ultimately, this section allows owners to lower tax liability (for the current year) instead of capitalizing on assets as they depreciated over the coming tax years.

3. Start-Up Deductions

If you’re a new business owner, make sure you are taking advantage of start-up deductions. That’s because any start-up expenses cannot be claimed under the general deduction section.

This doesn’t mean that new owners can’t claim a deduction. It just means it needs to be classified as a ‘new business expense’ and follow the guidelines. The guidelines state that new owners can claim up to $5,000 of qualifying start-up costs. These costs need to have been specifically related to starting an active trade or business (for example things like product or market research). 

4. Hire an Accountant

It should go without saying that all owners need a qualified business account. After all, the right accountant can do so much more than just prepare the final tax statement. Someone like us at A.P Accounting & Tax Services will take the time throughout the entire tax year to track income, spending, and expenses.

Not only will this make for a simple end-of-the-year submission but it holds owners accountable throughout it. This means that every receipt will be accounted for and tracked to make sure that there is not a cash flow problem. Otherwise, without regular checks, owners could be going months running a deficit.

So, to avoid these common mistakes, it’s best to have your books reconciled regularly, and by a professional. At A.P Accounting and Tax Services, we can be there for owners. We can be the ones to help manage your books and ensure that this tax season is stress so. 

So, if you’d be interested in knowing what services would help you this tax year, or what deductions you’d be eligible for, give us a call at 407-328-5001.

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