Tax season will be here before you know it, so it's time to prepare. There are some things you can do in the fall so you can hit the ground running in the busy time of January through April. Let's get started:
1. Find a tax advisor. Every business, no matter how large or small, needs a tax advisor, that is, someone who can review your company's financial statements and offer advice on how to prepare taxes, what deductions and credits to take, and how to minimize your tax bill. A good tax advisor is worth the price, and it takes time to find the right person, so if you don't have one, now's the time to start looking.
2. Get tax software. If you have a tax advisor, why do you need tax software? For a small business filing Schedule C, it's good to start working on your taxes and getting the essential information together to take to your tax preparer. Tax software can help you do that. You can get information on possible deductions and credits to discuss with your tax preparer, and you can get your business records in order to make the process easier (and cheaper) for the preparer. Read a comparison of business tax software, some of it available free online (for basic business taxes on Schedule C) or you can order it when it comes out later this fall.
3. Get your business tax records in order.Having complete records of business assets, loans, income and expenses means you will get through tax season more easily and quickly and save money on a tax preparer. It also means more deductions and credits and better results if you get audited. Read more about how to capture information for business records and the details on the records you need for business tax purposes.
4. Review 2012 tax changes. Some changes for 2012 can save you money in depreciation on business assets purchased this year. Other changes will expire in 2011. Read this article on 2012 business tax changes, gather information, and talk to your tax advisor about whether you might benefit from any of these changes.
5. Get forms for payroll taxes. If you do your own payroll tax processing, you will need forms for end-of-year reports. That means W-2s for employees and 1099-MISC forms for contractors, as well as W-3 and 1096 transmittal forms. You must use only IRS-authorized forms. Of course, if you have a payroll processing service, they can prepare these forms for you. Read more about how to get W-2 forms and other year-end payroll tax reporting forms.
6. Consider buying business vehicles or equipment, Depreciation deductions are the highest they have been or are likely to be (it's difficult to go above 100% deductions). Buying equipment in 2012 may allow you to take advantage of bonus depreciation or Section 179 deductions. Bonus depreciation may not be available in 2013, so it may be time to buy that equipment or business vehicle to get the increased deduction. Talk with your tax advisor about this so you have time to shop around and get the equipment. You must put the equipment in service (that is, start using it) in 2012 to take advantage of these depreciation deductions.
7. Review tax due dates for your business type. Don't get caught filing late or using the wrong form.
If you have a small business, including a sole proprietorship, partnership, or LLC, read this Tax Guide for Small Businesses, which includes filing deadlines and forms you will need, as well as information on amended business tax returns and extensions.
If you own a corporation or an S corporation, read this Guide to Corporate Taxes for helpful information on forms and filing.
Definitely agree with #1. People shouldn't really go it alone when it comes to taxes, especially if they are running a small or medium enterprise, where the risks are high and the dues are many. Every tax matter is a court case in the making, and the slightest oversight, such as accidental failure to pay certain duties, can land you in jail. It's not just math; it's policies. You are definitely going to need assistance from well-learned people who figure policies out for a living.
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