I don’t believe there is one sure-fire method to growing your business. What worked for one person to grow a business may not work for you or me. A system to grow your business to XX dollars in XX time is a system that worked for that person with certain education, experiences, and personality. Will you see the same results? Perhaps. That said, I am concerned about the number of businesses jumping on the Amazon bandwagon. Continue reading
Tax day approaches. For individuals and businesses who follow the calendar year, your tax return is due by April 15, 2015. It is true you can request an extension to delay filing your taxes. Here’s why you should file your tax return by April 15:
File Your Taxes Now and Know What Changes to Make This Year
The sooner you file your tax return, the sooner you will know whether you owe taxes or will receive a refund. Filing your tax return sooner than later gives you the opportunity to start planning for the 2015 tax year by learning from what you did right or wrong for 2014. Did you pay the correct amount of estimated tax payments? What about contributing to a retirement account? Did you keep receipts for all the expenses you should have? When you request an extension, most of the next year is gone, and you lose the opportunity for tax planning and correcting things you did wrong last year.
Get Prepared, Then Meet with a Tax Professional
I recommend you have a tax professional prepare your personal and business tax returns. Partnering with the right tax professional will ensure you take advantage of tax deductions and credits to your advantage. To help you answer some of your questions and build a list to ask your tax professional, I recommend two resources:
J.K. Lasser’s Small Business Taxes 2015 by Barbara Weltman – This book discusses everything from choosing your business entity, handling income and losses, expenses, home office deduction, tax planning tips, and much more. Use this book as a reference year round to answer your quick tax questions.
Small Business Taxes Made Easy by Eva Rosenberg – You should read this book cover to cover. The author starts with the basics of starting a business, choosing an entity, business plans, income and deductions, pitfalls to avoid, and much more. She is an IRS Enrolled Agent and shares her years of tax experience throughout the book, including downloadable book updates, checklists, and resource lists.
To make the most of your meeting with your tax professional, you need to have up to date accounting records, namely a balance sheet and income statements. Financial statements help you make timely business decisions. They also help your tax professional quickly get an overview of your company in order to provide the right tax advice for your situation.
So stop procrastinating and start gathering what you need to get those tax returns done. If your accounting records are in a bit of a mess, I can fix your accounting. Just get in touch.
Since estimated tax payments sent through the mail include your tax ID number, they can put your business at risk. Why mail your estimated tax payments to the IRS when there’s an easier – and safer – way?
Register your business at www.EFTPS.gov to make tax payments easily and securely.
If you are a sole proprietor or single member LLC filing a Schedule C for your tax return, register as an individual.
If you are a corporation, or if you don’t file Schedule C with your tax return, register as a business.
The registration process only takes a few minutes.
You just need:
- Business Name
- Business Address
- Tax ID
- Bank Account Information
When you’re done, save your confirmation number. The IRS will mail your logon information, which will usually arrive in two weeks.
Once you’ve received your logon information, simply log into www.EFTPS.gov to schedule your tax payment by the due date.
Estimated tax payments are due on:
- April 15, 2014
- June 16, 2014
- September 15, 2014
- December 15, 2014 (corporations)
- January 15, 2014 (individuals)
Accurate, up-to-date financial records and consultations with your tax guru can also help you make timely estimated tax payments and avoid a surprise tax bill.
One of the most commonly asked questions I get is regarding the business use of a personally owned vehicle. There are several ways this can be treated on your tax return and I don’t really want to get into all that. What I do want to help you do is track the right information to provide to your tax professional. This information will help determine which method will give you the best results on your tax return.
1. Mileage: There are a couple ways to do this. There are apps you can download on your phone to track your business miles. Personally, I bought a small weekly calendar I keep on the console of my car in plain sight. I found I needed the visual reminder of seeing the calendar for writing down my mileage. On January 1, (or the day you start using your vehicle for business), write down the odometer reading. Then for each business use of your vehicle, write down the beginning and ending odometer reading along with a few words stating where you went (i.e. meeting with client at ….). At the end of the year, write down the odometer reading again and total up your total business miles. Provide the beginning and ending odometer reading for the year along with your total business miles to your tax professional.
2. Vehicle expenses: This includes fuel, repair and maintenance, insurance, and registration. I like to put this information in a spreadsheet. Remember to look in all your bank accounts for this information.
Once your tax professional completes your tax return, they should tell you what information to track for next year. If you happen to buy another vehicle, start from step 1 of this article for tracking mileage and expenses until your tax professional determines the best method to handle the vehicle on your tax return.
This is the time of year when dozens of articles are published purporting to have the secret to receiving that big tax refund. Some of the articles make it sound like tax professionals are hiding the answer from you.
I’m sorry to say there is no “easy” button when it comes to that big tax refund, but want to know the real secret? Organized and accurate financial records. How could your tax professional help you take advantage of the myriad deductions out there when you can’t tell them what you spent your money on last year?
So go grab those piles/boxes/envelopes of receipts from last year and let’s get to work. There are lots of ways to get your information organized, but you want to get your taxes done now, right?
Open your spreadsheet program (Excel, Numbers, GoogleDocs, etc). In the second column, start labeling your categories – office supplies, meals/entertainment, insurance, licenses/fees, inventory, bank/merchant fees, professional fees, domain registration, start-up costs, etc. Keep the categories generic, but make a special list of large purchases like computers, electronics, equipment, etc. in the amount of $500 or more. We accountants call those fixed assets and they get special treatment on your taxes. Now start entering all those receipts with the date in the first column and the amount in the appropriate category column. Be sure to include items purchased with your credit card. The most commonly missed deductions by businesses are expenses paid from personal bank accounts, PayPal, cash, etc.
Once you think you’ve got it all in the spreadsheet, add totals for each column. Format the document to print or put it on a USB drive to take to your tax professional. Those are your total expenses. Now where are all of those invoices that make up the revenue you earned last year? Make a spreadsheet for those if that information is not already available in your e-commerce or invoicing software. While you’re at it, gather up those 1099s and any other tax documents you received in the mail. Your tax professional needs to see those too and may also require additional information depending on your situation, but this should get you off to a good start. Make a list of questions you want to ask your tax professional then make that appointment. Now. No procrastinating. This is the real secret to that big tax refund.
Next time we’ll talk about setting up an efficient system to gather this information throughout the year.