A lot of business owners are ill-prepared when it comes to their small business accounting. With tax day coming upon us quickly, it’s important to make sure you have everything in place. Here are few questions business owners can ask and should take into account when operating their business throughout the year and especially regarding taxes:
1. What Records Should Business Owners Keep Throughout the Year?
Businesses need to keep track of their sales invoices, purchase documents, bank statements, contracts with vendors, lease agreements, and shareholder and client meetings.
2. What Business Expenses Can Business Owners Deduct?
Some of the common business expenses are telephones, rent, office expenses (like office supplies), reimbursement for use of your personal automobile for business purposes, meals with clients (which are now 100% tax-deductible instead of 50% deductible), and basically anything used to generate business income.
3. What Are Some Tips to Help Business Owners Manage Their Cash-Flow?
The most important thing a business owner can do to manage their cash-flow is to regularly review their financial statements with their tax professional. Financial statements should include a budget, profit and loss statement, and bank statements.
4. How Should a Business Owner Structure Their Organization?
The business legal structure depends on the nature of each business. Someone who is a real estate investor that rents property would likely structure their business as a partnership, not an S-Corporation. Other businesses that generate personal income, such as electricians, attorneys, and CPAs, set their business up as an S-Corporation to avoid double taxation. They have to pay themselves a reasonable salary and must avoid paying every dollar out as self-employment income.
5. What is One Thing Every Business Owner Can Do Today to Prepare for Success?
The best thing a business owner can do to prepare for success is to regularly review their financial position with their accountant and tax professional. It is so important to be able to communicate transactions before the end of the year and before they happen. There may be multiple ways to structure them to come out with the best possible tax result.
Be Prepared This Tax Season with a Tax Professional in Orlando, FL
Is your business prepared for tax day on April 15, 2021? Newman & Company PA is an accounting, tax preparation, and tax resolution company based in Maitland, FL serving Orlando, Winter Park, and the surrounding areas in Central Florida. With over 30 years of accounting and taxation experience, we are the go-to firm for small business owners looking for a painless accounting experience.
Be sure you contact a professional tax preparation company like our team at Newman & Company PA when you’re preparing your business taxes by calling us at 407-960-4331.