How To Take The Stress Out Of Small Business Tax Preparation

As an entrepreneur, managing your income taxes can be one of the most stressful tasks on your to-do list. Filing for a small business can get complex fast, so being unfamiliar with the overall process can add hours of frustration and stress to your life.

However, it doesn’t have to be a headache. There are strategies you can use to make tax preparation both simpler and more manageable. In this post, I look at ways in which small business owners can de-complicate the process.

This article discusses:

• Research tax deductions you're eligible for
• Gather your necessary paperwork beforehand
• Using tax preparation software or hiring a professional
• Stay organized & keep track of changes throughout the year
  

Research Tax Deductions You’re Eligible For

As an entrepreneur, taking advantage of the tax deductions available to you should be a no-brainer (because it’s potentially an essential component of your long-term success). Without researching and tracking your applicable deductions, you can’t optimize the amount of return on your investments, much less reduce the total amount payable with taxes.

Applicable tax deductions may include more aspects of your day-to-day operations than you’d expect. For example, you may be able to deduct paying your kids for work, renting out your own home to your business, and even some personal fringe benefits depending on how you’re incorporated.. Taking the time to learn which ones apply can have a significant impact on your bottom line.

Some of the best deductions are exclusively available to entrepreneurs and small business owners, so make a point of watching out for them. Sorting through the tax code may feel overwhelming, but keeping aware of your options before the time comes to file your taxes can lead to substantial savings.

Gather Your Necessary Paperwork Beforehand

Staying organized and accounting for each of your potential tax deductions is key to reducing your overall tax liability (meaning how much the IRS will assess you as owing). We’re not trying to parent you, here: Assembling the appropriate paperwork before filing for any sort of deduction really can save a huge amount of time and hassle (both now and over the years).

So, make sure that you keep records of any planning that you do. It doesn’t matter if you do it if you don’t report it properly!

Using Tax Preparation Software or Hiring a Professional

Tax season is a stressful time of year for small business owners, particularly those who are inexperienced with filing their taxes. Trusting everything to tax preparation software can sound wonderfully convenient and hassle-free. However, it's important to understand that while it may be easy and save time, it isn’t perfect.

The hard truth is that anything programmed by human beings is only as infallible as we are. Despite what you see in movies, the smartest AIs still make occasional mistakes. An improper calculation or failure to include crucial information could lead to costly penalties from the IRS. So, make sure never to trust (even a top-of-the-line) tax preparation software’s results blindly.

Start with double-checking any proposal the software generates. Ideally, you should also make sure that you understand how any refunds will be paid out—at least enough to verify that your filings to-be adhere to all state and federal laws/regulations. I’m not saying “don’t use software” here. I am saying “don’t trust it blindly,” however.

Professional human tax preparers can be a great asset to small business owners, allowing you the time and resources to complete your taxes accurately. However, it generally pays to be careful here, as well. Too often, individuals select someone to do their return without doing the necessary research first.

Unfortunately, this can result in unprepared or incorrect tax returns. In fairness, sometimes this happens because the professional wasn’t given all of your documentation. Nevertheless, no one involved is perfect and even big-name tax preparation companies miss the occasional pop fly.

Choosing an inexperienced firm could be cheaper, but it can also cost your business more money than it saves. Especially when you factor in fines or an audit due to an incorrect filing, you start to see the bigger picture. Now that the IRS makes no secret of targeting the successful for audits, no one smart wants to poke that bear.

Ironclad Wealth Management specializes in tax planning for small businesses. You might say that we live in the tax code, so helping you navigate the maze is just another day at the office for us. In fact, it’s generally an interlocking aspect of the comprehensive, money-saving financial planning that we provide.

Stay Organized & Keep Track of Changes Throughout the Year

gain, if you’re reading this, you’re probably an adult. By repeatedly saying “get organized” and “keep your receipts,” I have no intent (or desire) to be anybody’s nanny. I just couldn’t say that I was giving you truly beneficial insights for reducing your tax-related stress level without emphasizing these points.

Believe it or not, it is very possible to go from dreading April to celebrating having made it through another tax season. Staying organized isn’t just beneficial for keeping tabs on your expenses. It also keeps changes to your business strategies and goals more manageable over the long term.

When you’re organized from the start, you can implement financial strategies more precisely whenever you need to. As a result, this can potentially help to keep your head clearer as an entrepreneur and reduce stress.

At the same time, it can also aid you in making smart decisions by reducing wasted time due to searching for information or correcting mistakes resulting from poor planning. You might even find yourself with more time to focus on aspects of your business with the potential to generate more profit or cost savings.

The Sum Total

Again, partnering with a professional could be your best way to go. Just make sure that it’s someone who knows what they’re doing. Ironclad has extensive experience with tax planning for small business owners and wealth management in Atlanta.

We enjoy helping entrepreneurs reduce their tax liability, keep a balanced investment portfolio, and more. Contact us to learn what we can do for you.

If Patrick Can't Save Your Business $5,000 in Taxes, You Get Your Money Back

‍

MGO One Seven LLC ("MGO One Seven") is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). Registration with the SEC does not imply a certain level of skill or training. All titles listed for individuals associated with Ironclad Wealth Management represent the individual's role with Ironclad Wealth Management, and not their role with MGO One Seven. Services are provided under the name Ironclad Wealth Management, a DBA of MGO One Seven. Investment products are not FDIC insured, offer no bank guarantee, and may lose value. Please visit our website www.WeAreOneSeven.com for important disclosures.

Please note, the information provided in this presentation is for informational purposes only and investors should determine for themselves whether a particular service or product is suitable for their investment needs. Please refer to the disclosure and offering documents for further information concerning specific products or services.

Nothing provided in this presentation constitutes tax advice. Individuals should seek the advice of their own tax advisor for specific information regarding tax consequences of investments. Investments in securities entail risk and are not suitable for all investors. This site is not a recommendation nor an offer to sell (or solicitation of an offer to buy) securities in the United States or in any other jurisdiction.