The end of the year is fast approaching! For many, December means holiday season and all of the joy that comes with it. For a small business owner though, this is a critical time to wrap up essential year-end tasks and gather financial records in preparation of another season – tax season.
Here are just a few of our recommendations to help set you up for success in 2023.
1. Know Your Deadlines
For most people, April 15 is the date they remember for their individual tax returns. For a small business though, deadlines depend on what type of business you have and how you’ve set it up legally. Many small businesses have the same tax deadlines as individual taxpayers, while others may not. In addition, small businesses frequently have other tax-related tasks with their own specific deadlines. By knowing what is due when, you will be better prepared when those deadlines arrive.
2. Gather Your Tax Forms
Tax forms vary and frequently depend on the particular business entity you’ve chosen. Returns typically include a summary page that offers an overall picture, and supporting schedules and documentation that go into more detail. Having the right forms is crucial to meeting the tax standards and regulations.
3. Collect Your Records for Income
You need to tell the IRS how much income your small business brought in for 2022. It is critical that you provide correct information, and the documentation to prove it. The types of documentation you will need can vary by the jurisdiction and the particular type of income. By having thorough documentation, you will be better prepared in case you are audited.
4. Collect Documentation for Expenses
Remember there are many tax breaks available to small businesses, however you will have to prove that your business qualifies for them. You may have to submit evidence to claim your benefit in many cases. Sometimes receipts are sufficient. With some deductions though, you may be required to provide more extensive proof. Be sure to get the right information for the right deduction.
5. Send Out Required Information Returns
The IRS requires that small businesses report certain information about the business. As an example, if you have employees, you have to provide a W2 for each person by the end of January. Knowing exactly what forms are required of your business up front will save time and energy later.
6. Consult a Tax Professional
Taxes are tough. Even with a plethora of information out there, filing taxes can be a daunting task. Don’t let taxes stress you out this holiday season, consider hiring a tax professional. They have knowledge of deductions, credits, and new regulations you may not be familiar with.
With the end of the year being so hectic, we know it’s not always easy to keep up with tasks you need to complete before the close of 2022. With these recommendations, we hope you will be in a better position for a successful new year in 2023.