As you approach the end of the year, you need to ensure that your finances are in order. As a business, that may require a little extra work on your behalf. You need to be smart about how you handle taking care of taxes as a small business.
Smart Tax Prep Tip #1: Make Sure You Are Caught Up on Your Taxes
First, with the first three quarters underway, you will want to ensure that you are caught up on your taxes. You should have paid estimated taxes three different times this year; if you have not paid estimated taxes, you are going to want to sit down, figure out what your income was for the past three quarters, and pay any taxes right away, so you can reduce the fees that you face.
Smart Tax Prep Tip #2: Figure Out Quarter Four Taxes
Second, if you have been in business for at least a year, you will want to use your information about your sales in last year's quarter four to figure out what your tax obligation may be in this quarter four. You will want to figure out what your taxes will be so that you can start to save for them, or you can pay them off at the start of the quarter to reduce the chance that you are going to face any penalties.
Smart Tax Prep Tip #3: Think About Investments
Third, you will want to seriously consider what type of upgrades or capital improvements you can make before the end of the year to increase your tax deduction. Look at your tax situation right now and figure out if you need a larger deduction on your taxes this year. If you do, you will want to make those purchases before the end of the year. Be sure to think about your long-term financial obligations before making any investments; you want to make investments and deductions that make sense for the long-term success of your business.
Smart Tax Prep Tip #4: Evaluate Old Inventory
Fourth, you are going to want to evaluate old inventory. If you have old inventory that you can't sell, it doesn't have to be a total loss. You can write off that inventory as a tax deduction, which will allow you to save money on your taxes. This is an excellent way to deal with old inventory that doesn't work for you anymore.
When it comes to taking care of taxes with your small business, you are going to want to make sure you are caught up on your tax payments, figure out your fourth quarter taxes, and think about deductions that can reduce your taxable income by making investments and writing off old inventory.
For more information about business tax preparation, contact a local tax professional.