Whether you own a small bakery down the street, head a big manufacturing company, or sell products on the internet, federal laws are no exception. Every business owner has to face their tax obligations. However, even long-time business owners face challenges when managing their taxes.
Taxation laws change over time. Whether it’s from a new government administration or economic changes, keeping up with tax laws is difficult and confusing. As a business owner, understanding how tax works will help you file and remit them properly during tax season.
According to research, 28% of taxpayers get their taxes wrong. Billions of dollars are owed by the government to citizens because of wrong declarations and filings.
Don’t be another statistic. Here are some useful tips so you can be one step ahead of your business taxes.
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Familiarize yourself with basic tax knowledge.
Penalties will strike you in the face once you miss deadlines or forget to file certain forms and documents. The best way to keep track of dates and tax requirements is to familiarize yourself with taxation basics that apply to your business.
There are different types of taxes every business owner should know. The list includes:
- Sales tax
- Income tax
- Employment tax
- Estimated tax
- Excise tax
Aside from these taxes mandated by the government, in the United States, sales taxes vary by state. These rates may affect ecommerce sales tax depending on where you are selling your products.
Take the time to study the basics of taxes, so you don’t get blindsided. The knowledge of taxation will help with smoother and error-free preparation.
Most errors that occur in businesses come from manual records. Inaccurate information can be detrimental to your business. More so, it can be costly when you declare the wrong amount in your taxes. Throw out your manual sheets and go paperless. The use of technology will make record-keeping more convenient, less error-prone, and more secure.
Furthermore, take advantage of automated software you can use for your business. These software can generate sales reports and the other financial transactions of your business in a single click. This way, you can easily track all the money that goes in and out of your business which you can use for auditing and taxes.
Granted, you will be given a refund if you overpay your taxes. But tax refunds are not processed immediately. You could use these funds for other aspects of your business development instead.
Mark your calendar for important dates and always confirm with tax collection agencies.
As a business tax holder, it’s your responsibility to identify tax filing schedules. Most tax collection agencies set deadlines for filing tax documents by April or May. Although other tax collection agencies also allow quarterly filing, make sure to take note of the due dates to avoid fines for late filing.
As tax laws are ever-changing, make it a habit to confirm important details with tax collection agencies. Updates on changes are posted on their websites. If you’re still unsure, speak to a representative. Never assume when it comes to tax policies.
Get help from professionals.
The most fool-proof way of managing your taxes is to get help from accounting professionals. Managing a business is not all about sales. There are different aspects that need to be managed to ensure the business grows.
You can’t expect one person to manage everything about a business properly. Let alone handling the confusing financial aspect. Therefore, improve accounting and tax processes by letting an accountant handle all of your financial transactions.
This way, you can ensure all financial records are up-to-date and accurate. Furthermore, professional accountants can handle tax filing for you, so you encounter fewer issues and penalties.
Even long-term business owners will admit that managing taxes is one of the most difficult parts of running a business. It’s confusing, and many things can go wrong.As a budding business owner, studying and familiarizing yourself with the aspects of your business is the key to success.
Following these simple reminders can make a great difference in managing unruly taxes. Make sure to take notes, but don’t be afraid of asking for expert help when things get tough.
Mike Pignatelli, CPA, is the CEO of Unloop, an agency built to meet the accounting needs of modern ecommerce businesses. As an experienced financial controller, Mike has worked with various seven-figure inventory businesses. Mike and his team are your go-to accountants if you need reliable data to make sound financial decisions.