The painstaking task of filing a tax return falls on the sizes of companies. Although, running a full-fledged business itself is a huge task in itself however, the tax preparation of all businesses and firms have to be filed within the year-end. Therefore, the small businesses should hire a qualified accountant that provides the best services required for the firm’s tax preparation. This in turn takes off a few of the workloads that generally pile up on the firms.

Since the preparation of a tax return can be a tedious task at hand, the small-sized business firms can follow the tips mentioned below to have an edge over tax preparation:

Separate Business and Personal Expenses:

Many firms often blur the lines between business and personal expenses and struggle to separate work and life in general. Sole proprietors unintentionally end up mixing these expenses. It is highly imperative to avoid such a mix up as in the case the IRS audits the business expense and finds personal expenses, they will then start rifling through personal accounts to trace commingled expenses and may disallow business expenses to be deducted from the inbox; thereby, increasing tax liability. To avoid this, maintain separate bank accounts and credit cards in your business’s name and keep accounting statements as evidence.

Maintain a good Record and Digitize it:

Proper maintenance of all the records of documentation is vital for justifying and obtaining deductions from income. Organizing the tax paperwork is a must and therefore, keeping a scanned on digitized platform helps the tax professionals with categorizing the documents and receipts of expenses much more efficiently.

Management of Payrolls:

Investing an efficient and robust accounting software is essential for looking over different areas of operation such as financial reporting, records of statements, consolidating business finances, invoicing, managing payrolls and expenses. It is important to ensure that the software is reputable as a lesser-known payroll service can have risks as the IRS checks for the payment of payroll taxes every quarter.

Claim income reported to the IRS:

All the income return forms such as 1099s are checked to match the income received and the income stated on the forms. The IRS has a copy of these forms and the client has to report that income regardless of whether they have filed or 1099 forms or not.

Hiring the right Accountant:

A qualified accountant must not only prepare financial statements and file the tax returns but also keep a record of all the documents necessary, updating the cash flow statement, tracking income and expenses, they must work throughout the years and not just on tax seasons.

Looking at the previous year’s tax return and formulating a business plan:

Through the previous year’s tax return, one can draw comparisons, contrast, take up references, and a road-map to resources that provide the framework for the coming preparation of the tax return and measure the business finances. Be engrossed in the tax planning and understand the differences between net and gross income and formulate a business plan.

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