Running an enterprise can be challenging even if you don’t add the complexity of filing tax reports yearly. Experts recommend that businesses need to work hand-in-hand with their accountants when preparing their annual tax returns.
It’s probably a big mistake to make financial decisions without seeking help from experienced accountants. Are you an entrepreneur who’s searching for ways to maximize your ROI and minimize your tax liability? Here are the top four tax tips you should know.
1. Work with tax experts
Take your time to hire the right accountant. According to Chandra Bhansali of Accountants World, businesses must hire accountants who can perform several tasks besides preparing financial statements. Accountants who are only good at one thing are probably not the best accountants for small businesses.
A good accountant sticks with you throughout the year and can help you track your income, eliminate your cash flow problems, and solve complex problems. Tax experts like Tri-Merit offer specialty tax services to help your business leverage the benefit of Research and Development (R&D tax credit).
2. Keep a business journal
Being audited doesn’t have to mark the end of your business. However, failure to get the right records to back up your deductions can be a disaster if you’re under audit. One best way to avoid this nightmare is to keep a business journal; it’ll serve as a daily log of your business processes.
Write down every small thing that you buy for the business. For example, maybe you just bought a new printer for your office — you’ll want to jot it down and attach an official receipt. Do the same for your phone call expenses and other miscellaneous stuff. You’ll feel more confident to face and audit if you keep track of the requisite documents. Compiling your daily reports into one tracking sheet shortens the time it takes you to assemble your taxes.
3. Update your hardware and software
Things like computers, furniture, software, and other machines are all 100% deductible within the same year that their costs were incurred. Each piece of equipment you add to your inventory needs to be of great value to the company. To avoid the nightmare of depreciation, consider upgrading your software and hardware from time to time. Have well-functioning equipment in your office space, and you can increase your productivity, which’ll go a long way to steer you clear of tax liabilities.
4. Separate your business from your personal expenses
If IRS auditors find that you mix your business expenses with your personal expenses, that may influence them to start monitoring your personal accounts. It’s a good idea to open a separate bank account for your business and yourself as well. Only run your business expenses on your business bank account or credit card and know the difference between gross and net income.
These are a few tips and tricks you should know about corporate taxes and how your business can maximize its ROI.
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