If you are an entrepreneur who owns a small business you might face a lot of stress in the tax season. Like most of the small business owners you would not have kept records of all the payments, receipts and expenses, which means the tax month will be a stress month for you.
Let us give you three most helpful advices that can release some of your stress:
Request for extension
If you are unable to manage all the records of the year in one month, it’s better to file an extension. It is advised that don’t delay the request for extension till the last minute. If you think you won’t be able to manage your tax returns, simply inform IRS beforehand.
Collect all the details of expenses and payments
Compile documentation for all your purchases, business expenses, income and records of transactions, pulling all your receipts, bank statements, cancelled checks and paid bills.
Make categories of all your expenses
Once you have collected all the financial records, sort and categorize each business expense into different buckets:
- Auto Expenses
- Home-Office Expenses
- Medical Expenses
- Office Supplies
- Charitable Contributions
Categorization helps you to feed the record easily in spreadsheets and run calculations to figure out deductions that you can request.
Document all the income
You need to keep a track of all your income and report it properly to the IRS. The IRS doesn’t care if you fail to report all your business expenses but will pursue you for failing to report your income properly.
You need to keep in mind that it is easier to maintain records daily rather than leaving all the work for the last day. You can take help from professionals at Tax Help MD who can help you prepare your tax returns.