As you can imagine, I field a LOT of questions about what small business owners can and can’t “do” to help with their tax liabilities, and I hear a lot of the same questions over and over. I thought I’d share a few things to keep in mind this morning.
- Pay Your Quarterly Taxes On Time. This might seem obvious, but I hear the same excuses every quarter, “We’re just a little light.” “Can I make it up next quarter?” “It’s only an estimate.” Don’t rationalize your way into a penalty next year!
- Make the RIGHT Investments in Your Business. It’s sometimes fashionable to spend irresponsibly in a small business, using the rational “it’s all a business expense!” Don’t fall into that trap, because while it will “save” on your tax liability, it also decreases your profitability, and that can have repercussions in your credit worthiness and the valuation of your business if, for example, you have an insurance claim, time lost due to natural disaster, and so on.
- Close Out the Books Monthly. I see folks failing to do this ALL the time, and if you don’t do this, you run the risk of losing an element of accuracy in them, first of all. You’ll also create an incredible challenge if there are inaccuracies or discrepancies, because now, instead of trying to track those across a single month, now you (or your bookkeeper) will have to chase them down across multiple periods. Ultimately, closing out your books each month will save you money.
- Understand Your Write Offs. Simply understanding this one point will save you money! I can’t tell you the number of times small business owners have come in and proudly mentioned “It’s a write off!” and been wrong. Inevitably, not knowing what is and isn’t a write off (or a deduction) will save you money, and allow you to direct your business spending in an appropriate way.
I’m willing to bet you’ve nodded your head at a few of these, and if you’re wondering about the list, and how not doing some of these might be impacting your tax bill, then we should not only talk about it, but also, discuss creating a plan to ensure your money is working properly in your business and not being wasted.
I look forward to hearing from you.
All the best,