When it comes to preparing and filing taxes, small business owners need to know what is required to stay in compliance and meet their obligations. Even small business owners who rely on their in-house accountants or an outside accounting firm can benefit from having a working knowledge of current regulations, deductions, and the tax preparation process.
Tax Management is Time-Consuming and Costly
Taxes have a significant impact on the day-to-day operation of small businesses. According to the National Small Business Association’s (NSBA) 2017 Small Business Taxation Survey, 58 percent of small business owners reported that the administration of federal taxes is their most significant challenge, with payroll taxes and income taxes ranking the top two most burdensome taxes.
For many small businesses, filing taxes is both time-consuming and expensive. Statistics show that one in three businesses spend more than 80 hours a year on tax preparation, which is equal to a productivity loss of two work weeks. In addition to having to pay taxes, running the accounting and bookkeeping process can be costly. The NSBA survey found that 67 percent of business owners are spending more than $1,000 a year on the administration of taxes, with a majority of small firms opting to use an outside tax practitioner or accountant to handle the job.
Whether you are outsourcing this critical function or handling your business taxes yourself, it is essential that you keep accurate records, gain a solid understanding of the latest rules and regulations, and have everything necessary when it’s time to file your company’s returns. The following are just a few of the online tools and resources you can access to help you take control of your small business tax management, preparation, and filing process.
IRS Small Business Tax Center
The Internal Revenue Service (IRS) offers a range of resources to help small business owners learn about business tax regulations and potential deductions. The Small Business and Self-Employed Tax Center addresses many common questions regarding income tax and payroll taxes. You can access additional tax tools, tax information, forms, and updates. There is even an online Tax Calendar with an option to subscribe to automatic reminders sent one or two weeks in advance of when a form or payment is due. It’s important that the information applies specifically to your small business, so consult a tax professional before making major decisions about how to prepare your business taxes.
IRS Virtual Tax Workshop for New Small Businesses
If your business is in startup mode, the IRS Virtual Small Business Tax Workshop offers detailed information designed to help new business owners understand and navigate their yearly tax obligations. This self-paced interactive online workshop consists of nine stand-alone lessons that cover topics including:
- An explanation of federal tax obligations
- How to set up and run your business so paying taxes is easy
- How to manage payroll withholding
- How to set up a retirement plan for yourself and your employees
Tax Accounting Tool: QuickBooks Online
Not using the appropriate tax accounting tools may put you at greater risk of encountering tax compliance issues. In fact, keeping poor records and failing to accurately identify taxable business income are two of the biggest financial pitfalls encountered by small business owners.
Selecting the right accounting software is central to creating a tax management strategy that helps you maintain accurate records, eliminate unnecessary paperwork, and avoid costly errors. This involves zeroing in on a tool that is user-friendly, integrates with existing tools, and can be used to automate tax workflows effectively.
While programs often cited as meeting the top criteria include Xero and Freshbooks, many experts rank Quickbooks the best online accounting application for small businesses thanks to its flexible functionality and extensibility. This cloud-based accounting software is easy to use, well designed, and built to serve a wide variety of users. It also features a dedicated dashboard for tax management, which can be used to file taxes, manage sales tax, and automate tax deductions on a quarterly basis. You can access records from anywhere and even file tax returns through your mobile devices. Because it simplifies even the most complex accounting processes, QuickBooks Online has become a popular tool among accountants, bookkeepers, and small business owners.
DIY Tax Software: TurboTax
Small businesses that file their own taxes online need a program that makes the process as painless as possible. Based on expert reviews and feedback from business owners, Intuit’s TurboTax has earned its reputation as the top overall do-it-yourself tax program by being comprehensive and user-friendly, with intuitive tools that help you navigate the complexities of the tax filing process.
Although it is slightly more expensive than comparable software, TurboTax offers the most features for the price. The software runs a double accuracy check through your forms and identifies hundreds of deductions and credits you might qualify for. There is both a Self-Employed option and a Business package that is ideal if you are an S Corp, C Corp, Multi-member LLC, or Partnership.
The software is available for download or online use and is compatible with mobile devices. Although TurboTax does not have a network of brick-and-mortar locations where you can get advice from a professional in person, its TurboTax Live support package provides you with a one-on-one review with a CPA or Enrolled Agent (EA) before you file, as well as unlimited live tax advice from an on-screen CPA or EA.
If you are looking for more robust in-person support, consider H&R Block. Ranked the best alternative to TurboTax, the software includes many of the same features at a lower cost, plus the benefit of approximately 12,000 retail tax offices located across the country.
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