Taxes. There isn’t another word that sends shivers up the spine of a small business owner or gives them such a feeling of dread; but it really doesn’t have to be that way.
There is help available to put together sound strategies, so you don’t fear every quarterly payment and get to keep more of your money.
On the Small Business Radio Show this week, Spencer Carroll, who is an experienced CPA at Gelt, discussed fourth quarter strategies. He’s also an accounting professor and owns a small real estate business. His accounting background and love for entrepreneurship was the perfect combo for Gelt, where he leads the sales team and helps clients optimize their taxes.
The Dread of Taxes
Here’s some of what Carroll had to offer small business owners in the way of tax advice …
Understanding the Fear
Carroll explains that the dread surrounding taxes often stems from viewing them as a cost or a bill. This perception leads to resistance against parting with hard-earned money. Many business owners focus on growth and customer satisfaction, often neglecting back-office tasks like bookkeeping and compliance, which are crucial for smooth tax preparation.
The Fear of the Unknown
Barry adds that the fear of the unknown plays a significant role. When business owners fail to track their tax liabilities throughout the year, they often face unpleasant surprises during tax season, leading to financial stress.
Best Practices for Tax Management
To mitigate these fears, Spencer Carroll outlines several best practices for small business owners:
Maintain Accurate Bookkeeping
Importance: Clean and accurate financial statements are essential for effective tax planning.
Actionable Advice: Invest in reliable accounting software and consider hiring a professional bookkeeper to ensure your records are up-to-date and organized.
Regular Check-Ins with Your CPA
Importance: Ongoing communication with a CPA allows for better planning and strategic decisions that can impact tax liabilities.
Actionable Advice: Schedule quarterly meetings with your CPA to review financials, discuss estimated tax payments, and explore potential tax-saving opportunities.
Separate Business and Personal Finances
Importance: Keeping business and personal expenses distinct simplifies tax filing and protects the business’s legal structure.
Actionable Advice: Open separate bank accounts and credit cards for business transactions to maintain clear boundaries between personal and business finances.
Understanding Deductions
Importance: Knowing what qualifies as a deductible expense can significantly reduce tax liabilities.
Actionable Advice: Familiarize yourself with common business deductions, such as office supplies, travel expenses, and home office deductions. Consult your CPA to ensure compliance with IRS guidelines.
Listen to the entire episode on The Small Business Radio Show
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