Starting a business is an incredibly exciting adventure, replete with opportunities and benefits. From the thrill of building something from the ground up, to being your own boss – growing a business can be the most rewarding aspect of any entrepreneur’s life.
While being an entrepreneur certainly has its perks, there are also daunting “necessary evils” involved with nurturing a business. We’re talking about the dreaded tax season. To help you keep your sanity, and keep your business running smoothly, here are some smart tips every startup should know to survive (and save money) during tax season.
Get Qualified Help
If you’re new to running a business, you might be woefully unprepared for the potential pitfalls inherent with tax season. Many startup owners underestimate how complex and consuming business taxes can be. That’s why it’s a smart idea to get a professional to help you with tax preparation for business. Hiring a CPA (certified public accountant), or a tax consultant service can save you loads of time, stress, and money.
To explain, a tax pro understands tax laws and should be able to help your startup stay compliant as well as organized to face tax season with confidence. Having a tax preparer for your startup can save you money too. This is because these pros can help you claim deductions, credits, and they’ll take advantage of tax breaks for your startup. Furthermore, a qualified tax preparer will help you avoid fines, penalties, or future audits, which can be hugely stressful and costly.
Keep Meticulous Records
One of the most harrowing aspects of developing a startup is arguably keeping accurate and detailed records. While it’s not every business owner’s forte, recording expenses and receivables is crucial in surviving tax season. Thankfully, there are plenty of helpful tools to assist startups to keep track of spending and sales. Do an online search for small business accounting apps and you’ll find a variety of different mobile tools to help keep finances recorded and organized. Maintaining spending and income data will allow you to stay prepared, orderly, and ready for tax season.
Keep Separate Accounts
Many startups fund their fledgling businesses with their own personal finances. This is understandable, especially when first starting out. However, in order to avoid confusion and more easily survive tax season, it’s crucial to keep personal and business accounts separate. This can be as simple as establishing separate bank accounts to create a distinct demarcation between personal versus business expenses.
Save, Save, Save
There is nothing worse than getting blindsided by a mammoth tax bill during tax season, and not being able to pay it. While you might be able to make monthly payments to pay off a whopping tax bill, it will be hard for your startup to get ahead financially with a burden such as tax payments to make before your business even gets off the ground. You can avoid this grueling pitfall by setting up a savings account and socking away money every week or every month. This account should be dedicated to only paying taxes and will greatly help when tax season rolls around.
Pay Estimated Taxes
In addition to saving up for tax season, you should also consider paying estimated quarterly taxes. A professional accountant can assess your startup business earnings and get an estimate on how much your business should pay your tax institution each quarter. This is a helpful strategy because it will make that big payoff during tax season less of a blow to your business finances. Furthermore, paying estimated quarterly taxes will keep your startup finances on track, and running smoothly.
Keep Calm and Stay Organized
As mentioned, keeping accurate records is key for any startup to survive tax season. However, to keep those critical records accurate, startup owners have to stay organized. Maintaining order in every aspect of your startup business is also a brilliant way to save time because you’re not scrambling for details when taxes are due. Moreover, keeping everything orderly will help you stay calm, and allow you to breeze through tax season with minimal stress. With the right preparation, organization strategies, and support system in place, your startup will have no trouble surviving next tax season with ease.