Most taxpayers living in the United States are guilty of procrastinating with their taxes. This includes small business owners, even those in service-based businesses. Filing your tax return can be a tedious and stressful task, especially if you wait until the deadline is upon you.
Depending on your business structure, you may have several tax forms and documents to complete and submit. It is understandable why the idea of filing your taxes may be an unpleasant thought.
Fortunately, there are a few things that you can do to ensure that you not only file correctly, but are also eligible to receive a tax refund. Here, we will go into detail on tax tips for last-minute filers to ensure that you have a smooth, albeit, short process.
Tip #1: Determine Your Deductions
Calculate all of your business expenses and determine what deductions you are eligible for. These deductions could include, but are not limited to, employee expenses, and travel expenses, charitable contributions.
Having prior general knowledge of what deductions are applicable to your business and accurately deducting them is one of the most profitable tax tips for last minute-filers. Reporting all of your expenses is crucial in ensuring that you do not have to pay an exorbitant amount in taxes.
Tip #2: Double-Check Everything!
Delays in your tax refund can be caused by simple mistakes that are made when filing your tax return. Small business owners, especially in a service-based business, should pay special attention to details when filing their taxes.
A seemingly insignificant error, such as missing a number in your Social Security number, can be easily made when you are rushing to complete your tax forms. Double-checking these documents before submitting them to the IRS can prevent delays or even penalties to your tax return.
- Is your business name spelled right?
- Is your bank information correct?
- Did you check your math?
Double-check everything! This is a vital tax tip for last minute-filers.
Tip #3: File Even If You Are Unable to Pay
Many small business owners are apprehensive about filing their tax return due to the fact that they know that they will be unable to pay if they owe the IRS. However, this is not a reasonable reason to delay filing taxes.
Small business owners, especially those in service-based businesses, are encouraged to file their tax return even if they cannot pay. The IRS offers payment plans to taxpayers who are unable to pay what they owe. You could qualify for an installment agreement that will allow you to make payments over time, if you cannot pay the full sum on the deadline.
Tip #4: File For an Extension
If you are certain that you will not make the April 18th, 2023, deadline to file your taxes, then you have the option to file for an extension. The IRS gives taxpayers and business owners six months to file their taxes, if they qualify, with an extension application.
It is imperative to note that this extension allows you extra time to file your tax return, but not extra time to pay your taxes. Thus, you should estimate how much you will owe in taxes and make a payment as quickly as possible. If you do not make a payment by the deadline, you may be subject to penalties and interest. A good rule of thumb is to try to pay 100% of last year’s liability or 90% of this year’s liability to avoid or reduce penalties. If your adjusted gross income is over $150,000, then you have to pay 110% of last year’s liability to avoid penalties.
Keep in mind: it is better to file for an extension than to merely file your taxes late.
Tip #5: Get Help
Filing your taxes can be an exasperating experience, especially for a service-based business owner. You do not have to go through this process alone. One of the tax tips for last minute-filers is employing someone who handles taxes for a living.
Hiring an accountant and/or a tax professional to assist you with filing your taxes can be quite advantageous, specifically with receiving your tax refund. These professionals can advise you of what paperwork you need and help you to make sense of your tax situation.
Having someone who can determine what deductions you are eligible for and understanding your pile of receipts can take a load off of you and ensure that your taxes are filed accurately.
Whether you are self-employed or a small service-based business owner, taxes are an important and unavoidable part of your life. Filing your tax return precisely and on time is essential to receiving your tax refund.
Whether your procrastination is caused by your busy schedule or your genuine dislike for filing your taxes, there are several tax tips for last minute-filers that you are able to follow to ensure an accurate tax return. File for an extension if you absolutely have to, as it is better to file for an extension than to file late.
Hire an accountant and/or tax professional to assist you. If you would prefer to file on your own, double-check your deductions and every small detail, and file even if you are unable to pay what you owe.
For help with filing your taxes this year, contact us below.