When you’re a small business owner, it’s easy to get carried away by all the responsibilities of running a company and put taxes off until the last minute. However, if you don’t have a solid preparation plan in place, you could end up missing valuable benefits, as well as face IRS penalties. Fortunately, there are many strategies and tools available to provide tax help. If you’re concerned about your small business tax preparation, here are a few essential tips to keep in mind.

5 Ways to Simplify Small Business Tax Prep

1. Invest In Accounting Software

Advanced software programs allow you to quickly and proficiently track business transactions in detail. Update these records daily, and you’ll have access to many of the numbers you’ll need to prepare your return. If you hire a CPA for outside tax help, this software makes it easy to export your data so the professional can prepare your tax returns with ease.

2. Calculate All Recent Purchases

Look back on all the small business expenses you made in the past year, such as buying new office equipment, real estate, or vehicles. With receipts in hand, you can apply many of these purchases toward the Section 179 deduction, a tax code that allows small businesses to take depreciation deductions on capital investments all at once as opposed to gradually over time.

3. Recognize Employed Relatives

If you employ any relatives at your small business, you may be entitled to additional benefits that could lower your overall tax liability. Specifically, this employment strategy can allow you to deduct a reasonable salary paid to the family member, as well as avoid FICA (Federal Insurance Contributions Act) and FUTA (Federal Unemployment Tax Act) taxes.

4. Review Credits and Deductions from Last Year

If you met the limits for credits on deductions on your previous year’s return, take note of how much wasn’t calculated due to the limit. In many cases, the remaining credit or deduction amounts can carry over and be applied to your current return to reduce your tax liability.

5. Make Estimated Payments Every Quarter

Not making estimated tax payments every quarter to the IRS can leave you facing penalties when it’s time to file. But that’s not the only reason to make them. Doing so will also help you avoid surprises on Tax Day, such as owing more than you had saved away.

If you run a small business in the Gig Harbor, WA community, Linda M. Shiraiwa, CPA PS Inc. offers comprehensive accounting services that can streamline your tax preparation process. Well-versed in current tax laws, this certified public accountant will assess your finances in detail to create an accurate return, as well as help you maximize credits and deductions. To learn more about these tax help resources, visit this CPA online. If you’d like to schedule a consultation to discuss your small business accounting needs, call (253) 858-6030.