The business owner’s mind has a lot to mull over year-round and among the matters they should worry about is tax compliance. Though not given enough attention by many, it is arguably one of the critical factors affecting their businesses.
According to Brian D. Kitchen, a Tax Strategist at Kreischer Miller, merchants should learn the significance of knowing their tax liability under the newly passed Tax Cuts & Jobs Act, and recognize that proper monitoring of taxes year-round can be of help during filing season.
Discover more ways tax compliance could impact business decisions all through the year.
Estimated Tax liability and Its Impact on your Business
A business’s income tax expenses are a cash flow matter that calls for attention, for budgetary as well as mitigation purposes (i.e., of possible penalties and interest due to tax underpayment).
The IRS agrees with most state and local authorities that estimated income taxes be paid through the year on revenue that is not put through tax withholding. Pass-through companies, i.e., Partnerships and S-corporations will particularly benefit from this because their pass-through income is not put through tax withholding.
When estimated taxes are worked out on a quarterly basis, it is easier for company owners to realize the cash flow effect their tax expenses has on their firm.
Which Tax Incentives Should Company Owners Consider?
When your business receives notifications of certain tax incentives all through the year, it allows their advisers a chance to clarify the benefits of these incentives. Plus, it will enable firm owners to include these tax savings when working out their taxes for the current year.
The Tax Cuts and Jobs Act offer a lot of incentives for multiple businesses across different industries. These inducements come either as tax deductions (reduces taxable income), tax credits (cuts tax fee dollar for dollar).
It is critically important for small company owners to understand what incentives entail and how they work as per the latest tax rules and plan to make the most of them.
Why Company Owners Should Work With Their Advisers Year-round
Meeting and updating your adviser all through the year puts them in the perfect position to provide you with proactive advice affecting your businesses at that time of the year, but will also get you ready for tax filing the coming season. That way, you won’t run into unanticipated tax fees and will be better positioned to make wiser tax-related decisions throughout the year.
Keep your eyes on your business taxes year-round not only to avoid penalties but also to benefit from the many incentives.