For many small and home business owners, taxes are confusing. What can you deduct, what forms do you need, should you call a professional, where are all your records????? Here are some tax tips and resources to make the process (a little) less painful.
Hopefully, you have all your records and receipts organized for the year. Keeping good records throughout the year makes taxes much easier. If not, then start gathering everything now. You need records to support your business income and expenses.
The IRS has an online guide that can help you. Explore Publication 583 Starting a Business and Keeping Records. There is a lot of helpful information here on keeping records, filing returns, paying taxes and more. Even if you do not do your taxes yourself, you should at least know what is required.
With tax software, many people find doing their own taxes relatively painless. I have used tax software for several years. It makes tax returns much easier to complete and math errors less likely. The programs walk you through each step of the process and are very user-friendly. Online updates mean the program always has the most current information from the IRS, and you can either file electronically or print and mail your return. (Always print a hard copy for your records. Hard drives fail and you don't want to lose your tax return that way!)
I find tax programs particularly useful for business owners because if you use the same program from year to year, your basic information just has to be updated in case things have changed, and they remember your depreciation schedules, making that essentially painless. Calculating and keeping up with depreciation manually can be a challenge for many, and it's one reason I really love using tax software. These programs help you determine the depreciation your business assets, from your business automobiles to computers.
Many business owners feel more comfortable paying tax preparers to do their taxes and that can be a good solution if you have a complex tax situation. However, I recommend trying to do them on your own for a few reasons: it can be a great exercise in learning where your money goes and how well your business is doing, and if you know how to do your taxes, you will always be able to double-check that your paid preparers are on their game. The questions asked by the tax software program should closely match what your preparer asks you. If not, your tax preparer might be overlooking crucial deductions and tax credits.
These are the two most popular tax programs. I use the H & R Block program, mostly because it's the one I started with and I'm happy with it, but I've heard good things about Turbo Tax as well.
And, while you are battling away at your returns, here are some of my favorite observations from fellow taxpayers:
If the Lord loveth a cheerful giver, how he must hate the taxpayer! ~John Andrew Holmes
The taxpayer - that's someone who works for the federal government but doesn't have to take the civil service examination. ~Ronald Reagan
Today, it takes more brains and effort to make out the income-tax form than it does to make the income. ~Alfred E. Neuman