How to QuickBooks Help to Save Small Businesses Money at Tax Time
Many small businesses use QuickBooks for their bookkeeping software. This is a great way to maintain financial records in a convenient way, especially around tax time. If done correctly, your QuickBooks file should wind up with tax time. However, if you have made small mistakes in recording throughout the year, you may have to pay more tax. Overlapping is never a good thing for a small business, so to avoid this situation you should have a review from a qualified advisor and by calling QuickBooks Enterprise support advisor who can see your mistakes to see what you have done during the year.
In a way error can occur when a business owner contributes his own money to his business. This happens now and then when you may have to use your money for business expenses. If this money is recorded as income only, it will be taxed. This type of income must be specified as an owner’s contribution to the business within your Quickbooks file to avoid tax. Do not make this mistake and pay tax on your own money.
Often, instead of paying money to use for their business, a business owner will lend money to their business. Those are funds that will be paid back to the owner, possibly at a more stable financial time in the business. Recognize, you only pay sales tax on income, not on loans or contributions. Record this type of loan as a loan so that it will not be taxed as income by mistake.
Many business owners use credit cards to shop for their business. QuickBooks is able to sort these charges and recognizes them as your business expenses if you have them properly entered. Suppose you buy new office furniture from a superstore and simply record the total amount spent. QuickBooks needs to know what kind of expense it was so that it can be classified correctly. This will be an office expense, and a tax deduction for your business. Take the time to specifically record credit card fees instead of only charging your credit card company once to get the exact deduction.
QuickBooks also monitors how much sales tax you have to pay to the state’s comptroller every year. However, if you have not properly recorded every transaction of your income and expenses, the sales tax payment can be very high. For each sale to the customer, the amount of tax must be entered separately from the cost of the item. The amount you will pay to the comptroller will also have to be entered correctly through the ‘Pay Sales Tax Liability’ window.
Finally, a common mistake people make in both business and personal finances is an incorrect recording of purchases with an ATM or debit card. It is easy to swipe your card and be on your way while doing a quick transaction. It is important to record each debit or ATM usage correctly. Every time you use a debit card, think that it is just like writing a check and should be entered just like a check.
Anyone using QuickBooks knows the value of this software. This makes it very easy for business owners or bookkeepers. However, it is always a good idea to have an experienced QuickBooks advisor review your file at tax time to help ensure that you are not paying too much in taxes.