It’s that time of year again. If you don’t already have all your paperwork in order, it’s time to get organized. Having good bookkeeping software is a great way to keep your records up-to-date and ready when you need them. If you don’t already have a tax strategy in place it’s never too late to start. Below are some tips to help you get organized and get the most out of your tax deductions.
- One of the first things you need to do is separate your personal and business checking accounts. It will be much easier to keep track of expenses as well as keeping your records straight for tax preparation each year. Having separate personal and business accounts will also make finding all of your records much easier if your business is audited.
- Open a charge card to be used only for your business-related expenses.
- Bookkeeping software such as, Quickbooks that will help save time while keeping track of your expenses. It will also make it easier to keep track of your invoices and payroll and much more.
- Record purchases and other expenses as they occur. Waiting to record your expenses may increase the chance for accounting errors.
- Take advantage of technology to keep track of your receipts. Take photos of your receipts. There is a free app (Expensify) that will help you photograph, record, and organize or categorize expenses, reducing or eliminating the need to manually enter in the information.
- Most bookkeeping software will help calculate your income taxes. However, if you have doubts, there is a fee-based cloud service called ZenPayroll that will calculate income tax each month. This app automatically calculates all state, federal, and income tax that you owe. If you hire a new employee this program allows you to eliminate some paperwork by filing a report to the government. It will also give your employees online access to their pay stubs.
- Do you have a home office? A home office that is used exclusively for your business can be deducted on your business tax return.
- Do you own a vehicle for your business? It’s important to keep good records for your vehicle-related expenses throughout the year. The auto deductions can be calculated in two different ways, one is to base your deduction on mileage (currently 58 cents per mile) or actual expenses. Actual expenses would include insurance, maintenance, tires, repairs, gas, depreciation, and other costs.
There are many ways to keep track of your business expenses so you can take advantage of eligible business tax deductions. At Summit CPA we offer multiple resources to assist small businesses. For more helpful tips contact our office at (866) 497-9761 to schedule an appointment with our advisors.