Happy New Year! Are you ready to tackle your taxes?
If you answered “no,” don’t worry. As the holiday season wraps up, many small business owners may find that they aren’t quite ready to dive into their tax paperwork — even though there may be the promise of a great tax return awaiting them. Here’s what you can do to get prepped for tackling taxes now — I promise to make it as painless as possible.
1. Stay updated about tax reform news
This year’s tax season is already shaping up to have a slightly different tone than previous years due to the passing of the tax reform bill and its surrounding discussion. What do small business owners need to know about the tax reform and how it affects filing their taxes this year? Kelly Phillips Erb at Forbes addressed common questions she had received about it from taxpayers with one of the most frequently asked including when the new law would take effect. She notes that once the bill has been signed into law, it will apply in the beginning of the 2018 tax year and take effect on January 1, 2018. This means the new law will affect 2018 tax returns, not the 2017 return filed in 2018.
Throughout the rest of 2018, it will be key for entrepreneurs to continue following tax reform news from reliable media sources. This will allow small business owners to better understand the changes within America’s tax system and educate others that have questions about the process.
2. Get organized
This is about more than collecting receipts that gathered up over the course of the year. Remember to keep these areas organized too!
- Mark down key filing dates for January like estimated tax payments, sales tax, and when tax season is slated to officially begin along with making note of upcoming deadlines.
- From 1099s to W-2s, designate a specific spot to store all of your necessary tax forms.
- If you got married, divorced, or had a child in the last year, this means your filing status has changed and should be updated accordingly.
- Filing method. How will you file this year? Determine if you will need to use a software or work alongside a tax preparer.
3. Determine which deductions your business can claim
There’s plenty a small business can claim as a deduction on their taxes including the cost of renting space, salaries and wages, and insurance just to name a few. The deductions extend to entrepreneurs that work from home too, such as home office, travel, and even meals. Take the time to make sure you’re not missing out on any lesser-known deductions. Some areas to highlight may include health insurance and start-up costs, applicable for those that started a business this year.
4. Contribute to your retirement fund
Do you have a Roth or Traditional IRA fund? How about a retirement account? Use this time to add as much money as you can to these accounts, as these contributions count!
5. Figure out if you will need an extension.
It’s never too early to determine if your business needs a tax extension. If you already know that you won’t be able to file on time, look into requesting an extension as quickly as possible. Additionally, it’s important to note that there might be changes for these requests in 2018 so be sure to check in with the IRS as needed.
Deborah Sweeney is the CEO of MyCorporation.com which provides online legal filing services for entrepreneurs and businesses, startup bundles that include corporation and LLC formation, registered agent services, DBAs, and trademark and copyright filing services. You can find MyCorporation on Twitter at @MyCorporation.