Taxes are a necessary evil. Business owners can have a hard time keeping track of taxes due to the amount that they have to pay at different times throughout the year.
Employers have certain employment tax responsibilities that they must pay and forms they must file. The Internal Revenue Service of the United States enumerates social security and Medicare taxes, federal income tax withholding and federal unemployment (FUTA) tax as employment taxes.
Whether you are self-employed or not, taxes will always be an issue for your company. Here are some tips on how to manage taxes as a small business owner:
1. Track your business expenses.
If you own a business, you have to keep track of all expenses you incur for it. By doing so, you can file an accurate tax return at the end of each year.
If cannot keep track of what is spent in cash, then make sure that every time you pay with a credit card for something business-related, including taxes, it is automatically transferred into your bookkeeping software. This will help you keep everything organized and easy to find when necessary.
2. Make a W2 form.
A W2 form is an important document that needs to be filled out in order for taxes to be paid correctly. Even if you are not an employer, having a W-two is necessary for self-employment taxes, which the IRS defines as a social security and Medicare tax primarily for individuals who work for themselves.
If you are a business owner that has taxes withheld from your paycheck, you still need to keep track of the taxes that are taken out for things like social security. Once a W-two form is filled out correctly, it can be filed with an employer or tax authority. It will give them more information about how much taxes have been paid so far in order to calculate exactly what needs to be paid at year-end.
If you are having trouble filling out everything, you can use an online generator. The easiest way to make this form is by using a w2 maker with which you won’t have to worry about making a mistake. That way, the process will be a lot shorter.
3. Make sure you have receipts for any business-related expenses.
A crucial part of tracking taxes is keeping receipts for any and all business-related expenses. If you do not have receipts, it is much more difficult to keep track of taxes because there will be no way to prove how much money has been used on the company itself. Business owners should also organize their taxes by creating a filing system that makes sense for them so they can easily access what they need at tax time.
4. Keep your records up to date and organized.
All your records must be up to date and organized. This is one of the most important things you can do to keep taxes in order as a small business owner. With all your records are kept up to date, it will be easier for you to file taxes each year.
It is cumbersome if business owners have to get audited for not having their records available or for not being organized. Too much time will be spent on dealing with it instead of focusing on the business itself and this is a waste of time, cost and effort.
5. Know the difference between deductible and non-deductible items.
It is important to know the difference between deductible and non-deductible taxes as a business owner because by knowing this, you will be able to keep track of all taxes more easily. Non-deductible taxes cannot be counted as business expenses and they do not reduce your taxable income.
On the other hand, deductible taxes are the ones that can be counted as business expenses. These types of taxes typically reduce your taxable income so it’s always beneficial to know what taxes can be deducted from your taxes.
6. Get professional help if needed.
An accountant can help you keep track of taxes as a small business owner. This is incredibly important because taxes are complicated, especially for new entrepreneurs who don’t have a lot of experience with taxes.
If you don’t know what your business is doing on a regular basis, it can be very difficult to keep track of taxes. Hiring a professional can help you save time and money.
Taxes are an integral part of both your private life and business, which is why you have to be careful with them. Always track your expenses and keep your receipts and records organized. For this, you could hire an accountant who will know all of this including the difference between deductibles and non-deductibles. To make things easier on you, use a W2 generator to make the form.
Categories: BLOGS, legal matters, LISTS, money matters, North America, tips, United States
Great tax-related tips for business owners, which can come in handy during any period, even beyond tax returns and filing. Knowing how to keep track of expenses goes a long way in helping companies remain solvent.