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5 Tax Tips for Entrepreneurs from Brendon Pack

2013 April 19
by Annie Wallace

If you are a small-business owner, establish an effective fiscal strategy to minimize corporate taxes; to track expenses, especially those providing high deduction opportunities; and to prevent a disapproving or audit letter from the Internal Revenue Service.

Gone are the days when the fiscal season would conjure up nightmares and operating fears in the minds of entrepreneurs and business managers. Following specific tax tactics can give you peace of mind in the long term.

Brendon Pack of 1800Accountant has compiled the following tips for Entrepreneurs and Small Businesses.

Monitor Assets

A small business can deduct most operating expenses, running the gamut from office supplies and salaries to marketing, utilities, and travel and entertainment. Under Section 179, the company can also deduct most capital purchases, a helpful fiscal opportunity for small and medium-sized establishments. Capital purchases are money you dole out on fixed assets, also known as long-term resources.

These include office equipment, printers, copy machinery as well as delivery trucks, computer servers and fax machines. The IRS also allows a small business to deduct intangibles, such as operating software. Monitor these resources throughout the year, because properly applied deductions ultimately maximize your company’s profit and overall return on investment, and the corresponding refund gives the business much-needed extra cash to fund operations and grow.

Embrace Technology

Technology has pervaded the business environment, and your business should take advantage of the myriad opportunities technological tools provide. Pay special attention to mobile technology, and use various apps to track expenses throughout the year, prepare fiscal reports at year-end, file your company’s returns before the deadline, and get your potential refund fast.

Smartphone apps, for example, can ease the operating frustration that often emerges during the tax season. You can use H&R Block Mobile, Tax Tracker and TaxCaster, among others, to effectively file taxes. Some of these apps operate on iPhone devices, some on Google’s Android. You also can use Tax Tracker and Receipt Filer to take snapshots of the company’s receipts throughout the year, something that can come handy during tax season.

Organize Your Business Records

Establish proper rules for filing, archiving and tracking operational documents, such as customers’ invoices, vendors’ bills and regulatory documents. For example, you can instruct your staff to use an accordion folder that is subdivided by month. Some sophisticated or customized models enable you to even organize your business documentation by week. By methodically sorting your paperwork, you plant the seeds for effective expense management and a smooth filing process at the end of your company’s fiscal year.

Track Contractor Data Accurately

A contractor is a business or individual who provides labor and materials as part of an agreement, or who does a job or performs a service in accordance with that agreement. Keep your contractor’s information up to date, to make sure you can promptly issue 1099s and other applicable tax forms at the end of the year. For example, if your company paid for electricity services rendered by an individual contractor during the year, make sure you have the electrician’s updated address and tax information, such as social security number or employer tax identification number.

Seek Professional Expertise

As an entrepreneur, you want to run your business and devote much analytical energy to finding the best way to grow your operations, make money and trump the competition. So let tax specialists take care of the fiscal paperwork. Unless you have expertise in tax matters, you should seek the savvy of someone well-versed in the nuances of IRS regulations, especially edicts pertaining to the industry in which you are operating. Professionals such as certified public accountants, enrolled agents and tax accountants can help a small or midsize business file fiscal returns properly. Other tax experts include tax attorneys and financial planners.

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