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Get Ready…It’s Tax Season: Six Tax Prep Tips!

Get Ready…It’s Tax Season: Six Tax Prep Tips!

By Yolanda Garcia Olivarez - Reg. Admin. - SBA South Central Region

 

 

 

As you settle down after thebusy holiday season, you will soon face another season…tax season! As a small business owner youneed to understand how taxes are going to affect you and your business. It isimportant that you file properly, avoid audits and claim the right taxdeductions. Entrepreneurs in the SouthCentral Region can find help and guidance from Resource Partners locatedthroughout Arkansas, Louisiana, New Mexico, Oklahoma and Texas.  {{more}} Here are a few tips that may easethe burden of tax preparation and to help you get ready for the April 15, 2013deadline. 1.Keep Good Records Properrecord-keeping year-round is the first step to ensuring your taxes are filedaccurately and that you have the paperwork you need to back-up your deductionclaims should you be audited. 2.Understand Your Deductions What small business deductions canyou take? Do you have the documentation and original receipts to back them up?Tax credits and deductions change each year. 3.Utilize the Small Business Jobs Act Tax Provisions TheSmall Business Jobs Act of 2010 signedinto law by President Obama has over 17 tax provisions decreasing the taxburdens for small businesses—several of these provisions can be taken advantageof during this year’s tax season. Utilizing these provisions will provide greatsavings for your business. 4.Remember the tax creditswithin the Affordable Care Act These tax credits will allow small businesses tocover up to 35 percent of the premiums a small business pays to cover itsworkers. In 2014, the rate will increaseto 50 percent. 5.Avoid Common Audit Traps It is very important to be aware of potential redflags and act on them before the IRS does: ·Classifying Employees as Independent Contractors – Independentcontractors and employees are not the same, and it’s important to understandthe difference. In the eyes of the IRS, misclassification can be seen as anattempt to avoid payroll taxes, and non-compliance can bring penalties and backtaxes. ·Home Office Deduction – This deduction is very specificand not all home-based businesses will qualify. Likewise, if you run yourbusiness from a commercial location and claim the home office deduction, youmight trigger some interest from the IRS. Know how to determine if you areeligible to claim it, and what specific expenses you can write off. ·Large Sum Miscellaneous Deductions – If you claim a largeamount of itemized deductions relative to your income, the IRS will getsuspicious. Likewise, if you bucket a large amount of miscellaneous expenses,you may raise eyebrows. Be specific and label every deduction. 6.Keep Business and Personal Expenses Separate – The IRS scrutinizespersonal expenses that may have been claimed as a business expense, such as theuse of a business vehicle for personal use. Be diligent about keeping goodrecords. Maintain a separate bank and credit card account for your business. For additional information on these tax tips and current year taxdeductions visit the SBA Small Business Tax Guide or contact the IRS http://www.irs.gov/. For information and assistance from local SBAresource partners, visit http://www.sba.gov/. We also invite you to follow us on Twitter @SBAsouthcentral and like us on Facebook at www.facebook.com/SBASouthCentral.