Any business regardless of size is expected to pay taxes each year. However, the type of tax and amount to be paid varies with the business structure therein. Payable taxes include a combination of myriad taxes that range from income tax, sales tax, self-employment tax, employer tax, as well as estimated tax. Tax management encompasses the tax preparations and planning done to ensure that your small business is conversant with its tax requirements and is a step ahead of the pressures of the tax season.
Proper tax management not only ensures your taxes are filed on time but further helps your business to avoid unnecessary costs and fines that are associated with tax defaults and late payments, including prosecution. It is always important for business owners to plan for the tax season early enough in order to avoid tax liabilities.
This checklist provides a how-to tax management guide to help your business through the daunting tax season preparations.
Step 1 – Tax Deadlines
1 Find out tax deadlines for your specific taxes
2 Establish a timeline for your filing preparations
3 Review your tax filing strategies for the set timeline
Step 2 – Preparing your Tax Forms
4 Identify the appropriate tax forms for your business
5 Identify the different requirements for different business structures
Step 3 – Pulling your Financial Records
Provide records of the following:
6 Your balance sheet and P&L statements
7 Your business bank and credit card statements
8 Business tax returns for the previous year
9 Accounting and payroll documents
10 Partnership agreements
11 Details of your asset purchases
12 Check that your loan balances are reconciled to your balance sheet
Step 4 – Compiling Business Expenses
13 Document personal expenses mixed with business expenses
14 Provide receipts of expenses such as insurance expenses and overhead costs
15 Include expenses from professional fees, utilities, and advertisement costs
16 Outsourcing help from a professional to capitalize on available tax breaks
17 Include an update of your mileage log
Step 5 – Others
18 Take note of ownership changes
19 Provide a summary of Year-to-Date Investment Activity
20 Categorize your meal expenses appropriately
21 Make deductions of estimated tax payments
22 Consider asking for an extension if necessary
Notes:
- It is highly recommended to hire tax professionals to ensure your business is compliant with all tax requirements
- Leverage accounting tools and software to aid your tax filing process
- Use tools such as mileage tracking apps to track and record your mileage
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