4 Things To Know About Filing Your Small Business Tax Return

by Matthew Person on January 18, 2016


About 85% of small business owners rely on a professional like Person Huff CPA Group to file their taxes. This is because according to a recent National Small Business Association survey, nearly 60% of business owners report that the administrative burdens were the biggest problems posed by federal taxes. There have been a lot of changes to tax law in recent months as a result of the “The Protecting Americans from Tax Hikes Act of 2015” – changes you may not be aware of and that can help you pay less tax. When preparing to visit us, here are four things that can help you be more organized so that the “hassle factor’ of tax season is minimized.

1. GOOD RECORD KEEPING IS IMPORTANT! Haphazard or incomplete records are one of the biggest problems accountants see at small businesses. Rather than using accounting software year-round, owners stuff receipts and bank statements into file folders and then have to sort them as the tax deadline approaches. If you are not using a computerized record-keeping system (such as Quickbooks) we can help you get started. Not only are good financial records important for filing tax returns but they will also make obtaining a small business loan or selling your business much easier.

2. KEEP COPIES OF YOUR PAST TAX RETURNS. Your prior-year tax returns provide a snapshot in time of how your business is doing. Reviewing the return and discussing it with us can help you for the future. For example, if your business suffers a loss, it may not be a one-year event; the loss can also be carried forward. If you have been missing important deductions and expenses, we can see that in your prior-year returns and correct it in this year’s return, helping you pay less tax so that your small business is more profitable. If you don’t have copies of your tax returns, we can help you get them.

3. ACCOUNTING FOR CONTRACT EMPLOYEES. The IRS is paying close attention to how your workers are classified. Companies must give W-2 forms to employees and 1099s to contract employees (“freelancers”) detailing their 2015 compensation by Feb. 1. Freelancers, many of whom are small-business owners themselves, should be sure they get 1099s from everyone they worked for the previous year. The IRS will match the 1099 copies it gets against the income you’ve reported, and if you failed to include any income, you’ll hear from the agency. We can help determine if you are classifying your workers correctly as well a prepare any W2s and 1099s needed for your tax return.

4. HOME OFFICE AND AUTO DEDUCTIONS. The deduction for using part of your home as an office has long been a point of contention between owners and the IRS. If an owner uses half the family room to run the business, the government won’t allow a home office deduction. A home office must be a separate space used solely for business purposes. On the other hand, the government recognizes that owners use cars for personal and business use. But owners must keep a diary of how many miles they drive for business each day, and calculate their deduction based on that amount. Many owners as they juggle work and family probably don’t keep those records, Berger says. The answer, as in keeping a company’s books, may lie in technology; there are smartphone apps like TripLog to help owners track business mileage. We can help you determine the appropriate deductions for both your home office and auto expenses and give you advice to make sure that these deductions stand up to scrutiny by the IRS.

Time is getting short to get started on your 2015 small business tax return. Our offices in Metairie, Slidell and Chalmette are standing by and ready to help you get started! Get in touch with us today!

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