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Small Business Taxes for First Timers: 3 Tips

By Edited Sep 1, 2015 0 0

Doing your taxes as a first time small business owner can be a bit challenging. Of course, business taxes are nothing like personal or home taxes. As an owner of a small business, you will need to decide if you want to do your taxes at home using a computerized tax preparation program or if you want to spend more money to hire a tax professional. If you decide to do your taxes on your own, programs that you should look into include TurboTax and H&R Block At Home. Using coupon codes is the best way to save yourself some money on the at home tax programs that are sold by those merchants.

1. Updated Accounting

It is very important that your accounting be up to date before you even start thinking about doing your taxes. That means that your books need to be perfectly updated, otherwise there will be errors in your taxes. If you have an accountant that manages your books for you, spend an extra hour or so with that person at the end of December to ensure that your books are up to date and that there are no errors in your books. You will find that your taxes are much easier to do when you have accounting that is perfectly updated through the fiscal year.

2. Deferring Income

Deferring income is a trick that many small business owners use to reduce their tax bill at the end of the year. If you know that you will be getting paid by various customers in December, ask them to hold off until the first week of January if you can afford to do so. For example, if you got paid on December 31st, 2010, you would have to pay taxes on that money when taxes are due in April 2011. However, if you got paid January 1st, 2011, you would not have to pay taxes on that money until April 2012. As a small business owner, your tax bill will likely be fairly large, which means saving every penny at the end of the year helps.

3. Increase Expenses

If you have any items that your business needs, purchase them before the end of the fiscal year. If you wait until January 1st or after of the next year to purchase any business related items, you won't be able to write those purchases off until you do your taxes the following year. If you know your business is going to need office supplies, equipment or any other items, purchase them in December so you can write them off when you do your taxes. The more business related purchases you have, the more deductions you will have. If you have any business related bills that are due, pay them before the new year begins because you can use those as deductions, too. The more deductions you have, the smaller your tax bill will be.

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