Role of Small Business Tax Planning
Proper small business tax planning has a huge impact on your financial outcome. Maintaining a healthy bottom line can only happy through proper planning. On the other hand, improper small business tax planning can have a negative impact on your bottom line.
Common Mistakes That Cause Costly Problems
- Not having cash reserves on hand – Planning for taxes is crucial to pay your taxes on time. In order to do this, you must have a plan in place. This takes place year-round, not just prior to tax season.
- Using improper forms to file your taxes – If you don’t comply with the IRS by filing the proper tax forms correctly, you will be subject to an audit and penalties.
- Lacking understanding about sales tax – Tax codes are constantly changing. You will need to know which sales taxes affect your business (sales, use and excise). You also need to have the tax forms on hand that are associated with your state. Keep track of tax-exemptions and stay on top of the different types of sales taxes.
- Lacking understanding about payroll taxes – It is imperative that you understand and allocate your payroll taxes between federal, state and social security.
Your Takeaway Tip
When reporting your quarterly payroll using the 941 form, record your monthly numbers and keep track of this throughout the year. Make sure your small business tax planning is properly planned all year. If you follow this advice, the money you save in penalties will go toward your bottom line.
Learn these 4.5 tax tips to protect your small business from an unexpected loss.