Business Tax Preparation in Laredo, TX
Preparing your personal income tax paperwork is one thing, but doing the same for a business can be a minefield if you don’t know what you’re doing. A crucial part of your administrative duties, business tax preparation is also amongst the most tedious of jobs and can seem a little overwhelming to the uninitiated. Of course, the ideal solution is to ensure that you stay on top of your tax information all year round, but we all know that doesn’t always happen.
Here, we have listed some terms you should be aware of, as well as tips for maximizing your deductions at the end of the year. You can also find out how we can help, and take the mystery out of returning taxes.
The federal institution that collects American taxes is the IRS, or Internal Revenue Service. Individual states also impose taxes, though those are collected by the state’s Department of Revenue. To some people, even the mention of the letters “IRS” instills fear, but we aim to take that fear out of tax season. We’ll help you by ensuring that you take advantage of every deduction the IRS allows.
Even if you are planning to involve a professional to oversee your tax responsibilities – and this is a good idea, especially as your profits grow – you should also be aware of any possible opportunities to maximize your deductions.
By getting ahead of the game and staying organized throughout the year, you won’t have any nasty surprises when the time comes to file. You can also make sure that you have all records, receipts, and paperwork already at hand, making the process simpler.
Here are some top tips for getting the most out of your business’s deductions:
1. Keep separate accounts.
It is far too easy to get tangled up between personal and business spending, and this could lead to a headache at best and serious legal consequences at worst. Keep a separate checking or savings account specifically for business expenses, and only use it to pay business costs. This makes it far easier at the end of the year, since you can simply use the statement from the dedicated business account.
2. Hold on to your paperwork.
We live in an increasingly digital age, but keeping a paper trail is still the easiest way to be clear on your deductions. You will be required to justify any costs you incur as a business expense before you can claim them, and keeping receipts makes this easier.
They can also be useful when completing your whole tax return, and it is worth keeping them just in case you are audited by the IRS after you have filed, which is a rare but possible occurrence. You can, of course, digitize these records, but they must be clear and accessible.
3. Record your time.
It is possible to receive a deduction on taxes if you use personal property for company purposes, such as a home office, dedicated entirely to work, or personal car used for business reasons. This requires meticulous records detailing the time and space you use for your business.
4. Itemize your travel.
Any travel expenses incurred as a result of business needs may also be deductible. Elements such as flights, car rental, lodging, and even food can all be covered if you can prove they were a requirement for work purposes. Again, careful, thorough record keeping of all receipts and invoices are essential.
Exemptions are as important as deductions in the tax world; the last thing you want is to pay an unnecessary bill. Make sure you are clued up on your rights and entitlements. A professional will be able to offer you key advice on this.
A few institutions which will also be exempt, including examples such as religious organizations (temples, mosques, churches, etc.), fraternal organizations (including social clubs), public charities (e.g., organizations serving homeless persons), or any of a broad variety of organizations considered to serve public purposes.
With business taxes, it is important to consider the status of your company, as this can affect the format and amount of your taxes:
Sole Proprietor: If you are self-employed or working as a sole proprietor, most states require you to file a tax return annually and pay estimated taxes quarterly. Your contribution will include self-employment tax, a Social Security and Medicare tax, and an income tax.
S Corporation: These are corporations who choose to pass corporate income, losses, deductions, and credits to the shareholders for federal tax purposes. These shareholders then record the flow-through of income and losses on their personal tax returns. They are then assessed tax on their individual income rate, allowing S Corporations to avoid double taxation. There are a number of requirements and restrictions with this choice of company.
C Corporation: This refers to any business where the profits of the company are taxed separately from the owners. Limited liability protects the owners from being personally liable for debts incurred by the corporation, and they cannot be individually sued for corporate wrongdoings.
Partnership: This is a business arrangement where two or more individuals agree to pool together money, skills, and resources, and to split profit and loss according to the terms of the partnership agreement. Partnerships may enjoy better tax rates, but they are often subjected to more liability than corporations.
Tax returns can easily become the worst part of the year, with confusing business categories, endless forms, and unique differences which can be easily overlooked. Getting your taxes wrong can have serious repercussions for both you and the business, so it makes sense to get advice from the experts.
With experience, a wealth of advice, and all the answers you could need, we take the stress out of tax returns. We can help your business to keep more of its money, maximize deductions, and be tax savvy, all while saving you valuable time. Leave it to the pros for a seamless, stress-free experience!