The guide for small businesses
Why DIY is a problem
What you can expect from tax and accounting services
Pros and cons of using tax and accounting services
Do you need small business tax and accounting services?
Introduction
As a small business owner, you will agree with me that you need professional tax and accounting services for your business. We all know that dealing with taxes and accounting is certainly not a chore… and sometimes it causes headache while doing it. It is very stressful to go through tax paperwork and equally determine the right forms that will need to be filled out. Additionally, you will equally need to worry about cash flow, tax payment deadlines and other things. One of the investments you would do for your small business is to hire professional tax and accounting services. So you won’t have to get caught in your busy work.
Today, in this article we are going to share detailed information that you will need to know about professional tax and accounting for your business. The goal of this article is to give you guidelines for your small business so you will know what to do. This will give you time to focus on the processes and systems that will set up your business to grow. Hiring a professional team will remove the burden off your shoulders. Not only will the professional tax and accounting firm do your taxes, but they will equally support your business throughout the year. They will handle your financial reports and keep up with transactions that move through your accounts.
The guide for small businesses
Let’s consider an overview of the process that you should follow when you are about to set up your financial system and prepare for taxes in the future.
How is your business structured
The kind of entity you use for your business will certainly impact the way your taxes will be filed. It is important to understand your entity in advance. So that you will choose the right professional tax and accounting services that will match your needs. The most common kinds of small businesses often include the following:
- Sole Proprietorship,
- Partnership
- S Corporation
- Limited Liability Company (LLC).
Always record your transactions
Don’t make the mistake to wait until tax season before you will start to work on your preparation for the filing or to call a tax preparer. Let the truth be told, tax preparation should be taking place throughout the year. As transactions are coming through your business. You will need to track the money that will flow in and out of your accounts. Bear this in mind that records are the foundation of every successful tax filing. You will need to have these records ready before the time of preparing your tax filing.
The particular records that will needed will vary, that depends on the kind of business entity you are using. As a general rule, you will need all information that will relate to both income and expenses:
Income
Have this in mind that all income that will you receive, needs to be recorded. So, be sure that you keep detailed records as your business will receives different forms of payment.
- Your sales transactions (receipts)
- The returns
- Your interest from bank accounts
- Any other money that will come into your account during the year
Expenses
At the same time, expenses will equally need to be tracked and verified. While it may seem like a hassle to track every money that will be spent, these expenses will add up and become big tax deductions. Not only do you need to understand how the money will be spent. But you will need to be able to back up your transaction with documentation, like a receipt or an invoice.
- Your marketing costs
- The vehicle expenses
- Fees and commission that will be paid out
- Maintenance or repair work
- Insurance premiums
- Your inventory purchases
- The business development costs
- Your employee salaries, including Form W-2, Form W-3, Form 940, and Form 941
- Services that will be outsource, this will include Form W-9
- Your interest costs
- Office supplies
- Travel, this include transportation, hotel, and food/entertainment
- Your rent or mortgage
- Utilities, internet, and phone services
A few of these forms must be completed and distributed before the time reach to file your taxes. For instance, your employee tax forms and W-9’s for a service that will outsource must be postmarked by January 31st for the previous year. Ensure that you hold onto copies of these forms, so that they were ready for your professional tax and accounting services.
Choose the right tax forms
You should understand that one of the complicated features of tax preparation is the variety of tax forms IRS uses. You won’t bother yourself to file every available form! Rather, talk to an a CPA tax advisor or accounting services provider. So that you will be able to choose the forms that will apply to your business entity. For instance, some forms will be filled out for an LLC that aren’t needed for a Sole Proprietorship. Tax forms may include the following;
- Self-employment taxes
- FUTA taxes
- Individual income tax return
- Profit or Loss from Business
Probably your business is set up as a Corporation, then you will need to file forms that relate to Shareholders, Schedule E and among other things.
Why DIY is a problem
To choose the applicable forms is the first step. Once you understand which forms will be required for your business, then you will need to fill the necessary information. You might decide to search online to find tutorials relating to the different areas and entries that will need to be managed on each form. There are equally software programs that will walk you through the process of how to enter the information for the forms. Although a DIY approach for your tax preparation and filing will seem like an affordable solution. The bitter truth is that you will likely leave your money on the table due to overlooked deductions and weeks. With a little change on a tax form will have a seriy impact on the amount of money that will be paid each year.
If you don’t have any training and experience with tax preparation, then the best thing to do, is hire professional tax and accounting services to handle the paperwork. All you will need to do is for you to provide your business and financial information to your pro tax accounting team. Then you will be able to sit back and relax, knowing that your tax accountant will oversee every thing about your tax filing. Business owners often find that tax planning services will help to reduce costs by minimizing their tax burden each year.
What you can expect from tax and accounting services
To choose a full service accounting team, means that you will be in constant communication with your accountant. You see, there is no reason for you to wait until tax season before you have a conversation about your tax preparation. Professional tax and accounting services will always provide support before, during, and after tax preparation.
Let’s look at professional tax and accounting support available for your small business:
Before tax season
The goal here is to be able to create a strong, effective accounting system that will make it easy for you to track your expenses and income. The right software will make it much easier for you to gather the information when it is time to file your taxes each year. Ongoing tracking will enable you take advantage of the available tax write offs. In addition, your tax accountant should provide information in relation to how tax laws are changing every year. So that you will be able to keep up with the newest rates and other details that will impact your small business.
Time to file your taxes
During tax season, your tax accountant will be there to review your financial reports and other necessary information. Probably you will be needing both a personal tax return and a business tax return. Then it is best that you have the same tax preparer handling both filings. These services are designed for you to maximize tax benefits available for both your personal and business needs.
After tax season
When things the tax season is over, it will feel good to know that your accounting firm will be just a phone call away when you need support. Many business owners will find it beneficial to have an accounting firm that will assist with your payroll processing and bookkeeping services.
Pros and cons of using tax and accounting services
Buy a software or hire a Pro
Upfront cost is what make people to consider professional tax and accounting services or to go solo. Trust me, it’s a flawed analysis, okay let’s do some math anyways.
You want to get full featured, intuitive tax programs for your business, the cost is between $30 and $90 for software packages. Yes, we have free online alternatives, but they can be very hard to navigate. We didn’t mention, tax software actually will allow you to upload your entire bank statements and PayPal transactions to do every heavy lifting. If you are planning to go at it alone, you won’t afford to skimp the user features.
When it comes to hire a CPA professional, there’s a wide range. You can even find someone as cheap as $70 or pay up to $1,000 if you really need someone conversant with complex investments. The high end pricing is basically reserved for those who are into stock trading, real estate, and others. For a small business owner, you must have a good idea on how much work will be needed to file. This will be made very easy, that’s, if you are able set up your business correctly. To start a business with little preparation will get you into legal trouble and will cause you to pay more in taxes. Trust me!
Time is money
Moving onto the real measure of value when you look at prices. If you are someone that’s very busy and you aren’t very meticulous with your tax documents. You won’t afford to put hours into learning tax code. It is unrealistic and stressful to look at the cost of professional tax and accounting services and think that you should just save that money.
Before you even agree to save that money. Understand that the average 1040 will take you up to 13 hours to complete, that’s according to the IRS. Now you have a business or multiple investments to manage, well, good luck if you try to calculate and learn everything. Sit down and do an estimate of how much time you will take away from your work or sleep. Is it still enough for you to file your taxes?
But with an experienced IRS tax professional, your taxes will be done within a day or two. These professionals, are used to procrastinators who come to them with their paperwork on their lap. And still expect them to have it done before the deadline.
No costly errors
Probably the critical advantages to spend money on a tax preparer are accountability and precision. Imagine the hours you would avoid to lose when you attempt to peruse and comprehend the IRS’s guidelines, and exceptions. You will find that the hours you might spend working over your documents and forms put together. It will cost you more than the cost of a professional hire. There is a space for mistakes when it comes to tax documents. You will protect yourself from getting huge penalties if you get it all wrong. An expert assessment preparer will likewise help to prevent overpaying. Probably because you have left out a deduction or exemption in your tax forms.
Tax software won’t hold your hand for the itemized deductions. Even tax code isn’t made for very easy for check boxing when you’re a business owner. The same thing goes for capital gains tax exemptions.
Not all professional tax services are equal
You should know is not all IRS tax professionals that knows the ins and outs of complex investments. You have to find someone who is known to have handled high profile clients, this will make know that you’re getting what you paid for. The best professional tax services always stay busy and often have a limited number of seats. Last-minute procrastinators will likely not get an IRS tax pro who is good and knows what to do with non profit organizations. Together with low income real estate investments. It’s a good idea when you ask your friends for recommendations. That’s why is good to start early to be able to find someone licensed and competent in all manner of tax code.
Tax preparation fees may be deductible
Probably one of the biggest pros when you hire a professional tax service is the chance to get your taxes done for a discount. Not everyone will be able to benefit from this deduction, but it certainly does qualify as one. This is a perfect opportunity to showcase the fact that you’ll get more tax deductions as a small business owner with a pro. Now, to get your tax prep fees deducted, it will go under the miscellaneous items. It will include cost of travel, postage to mail in your papers and receipts, and other important tax documents.
Probably you are using a tax preparation software, you will try to include it as well. Obviously, we at Teejaytrue will say that the biggest pro is to hire a professional tax preparer. As well as to get the most out of your itemized deductions. You need to exceed your AGI by 2% that’s if you want these deductions to count, which will be very difficult to calculate on your own.
Do you need small business tax and accounting services?
How will you know it is time to invest in professional tax and accounting services? In the beginning, to pay for professional tax preparation support always looked like a big expense. Especially when you pinch pennies to get your new small business venture off the ground. But trust me it is worth the investment to hire a pro tax accounting team from the start.
Professional tax and accounting services for small businesses will give you the foundation you need that will help your business flourish. A good accounting and financial system will give you a clear and perfect picture of the financial health of your business. This information is important, to help you see potential areas of growth and equally stop you from spending in the wrong categories. A tax accountant will help with much more than tax preparation, which is why it will make sense for you to start with these services immediately.