It’s quickly approaching that time of year again – tax season. Have you taken the time to map out an end of year tax strategy for your business? If the answer is no, now is the time to start. Business owners typically think of taxes as something that doesn’t need attention until the beginning of the year. This way of thinking could prevent you from paying less to Uncle Sam and keeping more of your money. Money that can be reinvested in your business. To avoid being left at a disadvantage, consider the following myths and misconceptions concerning end of year business taxes.
Spending Money, Saves Money
A common belief, many businesses think that they should spend everything they possibly can in order to reduce their profits. Because expenses reduce the amount of taxable income, it can minimize the amount in taxes to be paid. You can run into problems with this approach if you are not spending smartly. Spending just to spend can land you in a pile of debt. On the other hand, if you are spending money on equipment, software, services or other items that make sense to invest in, purchasing them during the current tax year would get you the discount.
April is the Only Deadline to Worry About
New business owners often make the mistake of believing that April is the only deadline for taxes. In reality, businesses are often required to make quarterly payments towards their tax debt. If these payments are not made, the business risks fees, penalties and trouble with the IRS. How can a business owner prepare for quarterly taxes? Start by looking at previous year’s revenue and taxes. You can then base your estimated payments on what you find. By preparing for these quarterly payments, you won’t experience the last minute panic of trying to come up with liquid funds in the Spring to pay a large tax debt.
You Must File by April 15th
Individuals are not the only ones that fail to realize it is possible to file for an extension – businesses are usually left in the dark on this too. The IRS will actually grant individuals and businesses a filing extension of October 15th. Keep in mind that this does not exempt you from paying on time. It simply means you have more time to get all of your paperwork in order. If you pay late, even with an approved extension, you will be paying penalties and interest.
Have you found yourself in some of these situations? Was there a common end of tax year myth or misconception that led you astray? There are many ways to get your business’ tax issues under control in order to get back on track. For those seeking liquid funds, a merchant cash advance with a high risk provider like FAM. might be the answer. When it comes to taxes, there is no amount of preparation and organization that can be deemed to be too much.
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