In part one of this two-part blog series, we went over some basics on how small business owners can remain tax compliant at all times. There are a few basic IRS requirements here and other factors to evaluate, and many companies count on professionals to assist them in this realm.
At Singular Bookkeeping, we’re proud to assist small business owners in numerous ways, including small business accounting services and more. Part one of our series went over themes like accuracy in bookkeeping and self-employment tax; today’s -part two will dig into a few other areas to ensure you’re tax compliant with your small business.
Quarterly Estimated Taxes
Because self-employed people (including business owners) don’t have taxes withheld from their paychecks in the same ways as normal employees, they will instead pay what are known as quarterly estimated taxes. This means that you’ll need to set aside money each quarter to pay your expected tax bill.
Those who are expected to owe $1,000 or more in income tax (most business owners, that is) are required to make these payments using Form 1040-ES, which is available on the IRS website. If you fail to make estimated tax payments, you may be subject to penalties from the IRS.
And important concept to keep in mind here is deadlines. Quarterly deadlines for these tax filings are April 18, June 15, September 15 and June 15 (some business owners will have until January 18 of the following year for this final quarter). You must file and pay even if you don’t owe any tax – so be sure to keep on top of your estimated payments!
Another key part of staying tax compliant is knowing which deductions you’re eligible for as a small business owner.
There are many standard deductions that can be taken, including those for: Home office expenses, vehicle expenses, travel and entertainment, business meals, and more. You can find a full list of them on the IRS website.
It’s important to research these deductions and make sure you’re taking advantage of every one that applies to your small business. This could amount to sizable savings at tax time!
Finally, as the owner of any small business, it’s important to keep your personal and business finances separate. This means having two different bank accounts – one for your business, and one for your personal life.
This is an important way to demonstrate to the IRS that you’re properly separating your business and personal activities. It can also help you avoid any potential mix-ups down the road.
For more on how you can stay tax compliant as the owner of a small business, or to learn about any of our small business accounting or bookkeeping services, speak to the staff at Singular Bookkeeping today.