A business is a company that performs specific tasks or provides goods for a profit. There are multiple types of businesses, including large corporations, small businesses, and sole proprietorships.
While larger companies typically have a finance department, those who run a small business or are self-employed usually have more hands-on involvement with business taxes. Whether you employ a bookkeeper or take your paperwork to an accountant who prepares your taxes, there’s a good chance you set aside receipts and other documents that could affect your taxes. Let’s look at everyday business expenses and how to ensure you deduct them when filing your tax returns.
Learn which expenses you can deduct.
The Internal Revenue Service (IRS) outlines tax guidelines for businesses, clarifying what you can write off when filing your taxes. Familiarizing yourself with accepted deductions can prevent you from overlooking receipts and invoices that would reduce your tax burden. It can also help you plan when preparing a budget. You may choose different options based on their tax advantages if you understand how each choice affects your business’s taxable income.
Your potential deductions can also help you identify alternatives to expansion, such as renting a storage unit to secure company belongings. Use a storage facility search tool to find storage in Arlington TX. You can search by city or zip code and filter results by unit size. You can use a storage facility finder to lock in a great price on your storage space and enjoy a reduced rate for your first month of storage fees.
Create a system for saving paperwork.
Whether you intend to prepare your taxes yourself or hire an accountant to prepare your taxes for you, you still need to collect tax documents. This means you may need to instruct your bookkeeper to set aside invoices, receipts, and contracts relevant to your tax filings. If you handle your finances, you’ll need to create a system for securing these documents.
Paper product companies offer various products you can use to organize your documents, such as binders, tax return folders, and envelopes. Binders are an excellent resource for maintaining ledgers and notes about business expenses. You can use pocket folders to secure paperwork in your binder. Alternatively, you can keep those receipts and invoices in corresponding tax folders, file folders, or envelopes, ensuring you have them on hand when it’s tax season.
Hire a licensed accountant.
Accountants deal with financial documents every day. These business professionals spend four years earning a degree in their field before obtaining their Certified Public Accountant (CPA) license. The depth of their training ensures they have a comprehensive understanding of how the tax system works and what items businesses can deduct. Reducing your tax burden increases your company’s revenue, enabling you to invest in expansion or pay down debts. You can also claim your accounting expenses as a tax deduction, enabling you to reduce your tax burden further. Outsourcing companies make it easy to hire an accountant to perform the tasks you need without paying an accountant’s full-time salary, making it possible for companies of all sizes to secure the services these business experts provide.
Learn about filing taxes.
Some business owners need to prepare their taxes themselves because they can’t afford an accountant yet or are determined to understand every aspect of their business operations. You might be surprised to learn that the IRS offers small business tax workshops and free access to multiple resources small business owners can use, such as videos and a digital learning platform. Educating yourself about business taxes and how to prepare tax returns ensures you capitalize on available deductions and avoid mistakes with your return.
Deducting business expenses begins with identifying expenses you can deduct. Create a system for storing documents and hire an accountant or learn how to prepare your business tax returns.
