Tax season is in full swing right now as the countdown to April 15 intensifies. As the owner of a startup, you’ve no doubt been focused on forming your company, connecting with suppliers, advertising your product, and getting your business off the ground. However, if you’ve been actively selling a product or service, you’ve been collecting revenue and piling up expenses that Uncle Sam wants to know about. Thankfully, helpful tips are available to guide you through your first tax season as a small-business owner.
Find a Good Accountant
As Forbes points out, it’s not only a good idea to find a reliable public accountant, but also to establish a strong relationship with one. A good CPA can help file your taxes this year and prepare you for the future by discussing the best bookkeeping software for your business and advise you on the type of structure that best suits your company. You don’t need a CPA on staff to watch over the everyday activities of your company, but quarterly meeting will help you establish responsible financial practices. Additionally, a CPA can tell you how to accurately categorize your expenses to ensure advantageous treatment on your tax returns.
Use a Good Bookkeeping System
When it comes to bookkeeping, most startups turn to QuickBooks. An extremely popular software tool, QuickBooks can walk you through the process of bookkeeping by aiding you in entering, categorizing, and tracking income and expenses for your business throughout the year. If QuickBooks isn’t your thing, there are alternatives such as FreshBooks and Xero. The former is particularly useful for small businesses and sole proprietorships. Regardless of your preferred software platform, having a reliable bookkeeping system in place is better than not having one at all. Accurately tracking your incomes and expenses throughout the year will make tax time much less stressful.
Set Up Retirement Plans Inside the Business
As a startup, it is easy to overlook or purposely ignore a retirement plan. Few startups hit the ground running with cash pouring in from operations. The result is an environment in which most business owners put income and cash towards other aspects of the business. However, establishing a retirement plan within the business allows you to claim tax credits because offering a plan as part of your company is deductible. Not only do you offer yourself an additional benefit, you earn deductions on your taxes at the same time.
If that’s not enough reason to do it, think about the future of your company as well. As your business expands and you consider hiring the best talent available, a retirement plan is an attractive benefit that goes above and beyond compensation, potentially making the difference between that individual joining your company or the competition.
Life is tough as a startup, and there is a lot to think about as the owner. When it comes time to file your 2014 taxes (and taxes for future years), keep these tips in mind to ensure that you minimize the stress and breeze through your filing.