Preparing Your Small Business For Tax Season & Simple Business Write-offs
Preparing your small business for tax season can be challenging for small business owners like you and me but I’ve learned that with the right planning and preparation, we can make the process a bit easier and less daunting.
Table of Contents
Preparing Your Small Business For Tax Season in San Diego
Hiring The Right Accountant Or Tax Professional
Organizing and Record Keeping for Small Business Tax Paperwork
Profit Tracker For Small Businesses and Staying Current With Your Small Business Expenses
Claim All Reported Income
When Can I File Taxes for My Small Business & Tax Filing Deadlines
Separating Personal From Business and Itemizing Expenses
Common Tax Season Mistakes
Some simple business write-offs that you may be eligible for when filing your taxes
Tax Write-Off Investments I Recommend For Your Business Before 2024
Preparing Your Small Business For Tax Season in San Diego
Preparing taxes for your small local business can seem like a daunting and complex process, but keeping and organizing all necessary information can make the difference between shuffling things last minute wondering if your business will survive this year’s round of tax season, or creating a plan that will support your financial goals and business bottom line.
Here are some steps I personally take to prepare (not necessarily in this order!)
Hiring The Right Accountant Or Tax Professional
Sure, you’ve tried Turbo Tax or H&R Block for your personal taxes and you loved it, but it’s time to work on your small business taxes.
I recommend hiring a tax professional.
Anything tax related is like a different language I don’t understand…so I always let the experts do their job! They can provide valuable advice on deductions and credits and ensure that your taxes are filed correctly and on time.
Proof of Identity, Business Tax ID and Financial Records
When working with an advisor who will help your small business this upcoming tax season, you will need to provide them with information about you and your business.
Prepare yourself by gathering all financial records including your proof of identity such as your State Issued ID or Driver’s License, as well as your business tax ID such as your EIN (Employer Identification Number) or Social Security Number.
Organizing and Record Keeping for Small Business Tax Paperwork
Gather all financial documents: I keep all the documents I need to file my taxes in a folder. Including bank statements, receipts, invoices, W-2, and 1099 forms.
Organize records: I organize all my financial records and receipts at the end of each month. Then I review my expenses and see if there are any deductions or credits I may be eligible for. Common deductions include car mileage, business expenses, professional services (like a Personal Branding Photoshoot!), and education. Keep reading for more info about it!
Profit Tracker For Small Businesses and Staying Current With Your Small Business Expenses
I fill out my profit tracker with my monthly income & expenses. I personally use a spreadsheet but you can sign up for an accounting software such as Quickbooks to keep track of your income & expenses if it’s easier for you.
Claim All Reported Income
Keep in mind that as you purchase and sell products, goods, and services from other businesses, you will need to report the same amount reported even if that client does not send out their form, you still need to report that income.
When Can I File Taxes for My Small Business?
April 15 is widely recognized as Tax Day, the deadline for individuals, sole proprietors, and C corporations to submit their tax returns. Additionally, there is an option to make tax payments throughout the year known as "quarterly estimated tax payments".
Tax Filing Deadlines
File on time: I make sure I file my taxes by the deadline to avoid penalties and interest charges.
Pay taxes: If I owe taxes, I make sure I pay them on time to avoid penalties and interest charges as well. I pay my taxes online, but you can also pay by mail, or through an installment plan.
Preparing Your Small Business For Tax Season in San Diego
Tips for entrepreneurs and business owners while filing taxes.
Separating Personal From Business Expenses
It is very important to separate personal from business expenses when it comes to reporting taxes.
Keeping your business records separate from your personal taxes is not just professional but a much more organized and streamlined way to keep your taxes up to speed.
Itemizing Expenses for Small Businesses
Categorize and itemize your business expenses on a monthly basis to keep all finance records in order throughout the year.
This is where you may choose to work closely with an accountant or tax professional who can help you streamline the process for your business during this upcoming tax season. For example those professional headshots you took for your local business are a deductible expense. Did you get a brand new website to level up your professional services to your audience?
Keep track of your business expenses on a monthly basis to make things easier when the time comes to file your taxes. It is recommended to keep track of your expenses throughout the year and continue keeping your financial records current as opposed to gathering and organizing everything before the end of the year.
Common Tax Season Mistakes
Avoid these mistakes small businesses do to ensure you are on track to a successful year during this upcoming tax season
Not asking for help or taking action
Mixing Personal and Business Finance Records
Being Unorganized With Finances
Waiting until the last minute
I follow these steps so I can prepare for tax season and make the process much easier and less stressful.
Now, since you made it all the way here, I have a BONUS gift for you!
Here are some simple business write-offs that you may be eligible for when filing your taxes:
Advertising and marketing
You can deduct the cost of advertising and marketing your business. Costs associated with traditional or online advertising, or creating and distributing promotional materials like brochures, flyers, and business cards. Also, expenses related to digital marketing tools and software, such as email marketing platforms, customer relationship management (CRM) systems, and analytics tools. See examples below!
Business mileage
If you use your personal vehicle for business purposes, you may be able to deduct the mileage you drive for work.
Education and training
You can deduct the cost of education and training related to your business or profession.
Home office expenses
If you have a home office that you use exclusively for work, you may be able to deduct a portion of your home-related expenses, such as rent, mortgage interest, utilities, and insurance.
Office supplies and equipment
You can deduct the cost of office supplies and equipment, such as pens, paper, printers, and computers.
Business meals
You can deduct some of the cost of business meals.
Professional services
You can deduct the cost of professional services, such as legal and accounting fees…and a Branding Photoshoot!
3 Tax Write-Off Investments I Recommend For Your Business Before 2024:
Flodesk
Flodesk revolutionizes your email marketing experience, catering specifically to the needs of creatives and small business owners. It’s designed to make email marketing not just efficient but also an enjoyable experience because it’s easy to use and it looks so good! I signed up for it at the beginning of 2023 and now I even find writing newsletters fun. Flodesk is the ideal tool to connect with your audience and expand your brand. Create visually striking emails, streamline workflows with automation, and witness a significant boost in engagement.
Send emails your audience wants to open & get 50% off your first year with my referral link.
Honeybook
HoneyBook is a cloud-based customer relationship management (CRM) solution designed to empower small businesses. Here are some of the features available that I LOVE: Create all your communication emails and save them as templates. Everything can be fully customized to YOUR BRAND; Access powerful & time-saving workflow automations; Offer fast scheduling where you can share your calendar, confirm meetings and get booked; Send easy-to-use contracts that are ready to be signed online; Easily create and send invoices so you get paid on time; Provide secure payments.
Personal Branding Photoshoot
Brand photography is an amazing way to bring LIFE to your business. Photos of you build trust and help your business stand out in a sea of a thousand <insert your profession here>. And yes, it is TAX DEDUCTIBLE for your small biz!
Remember, it's always better to start early and be organized throughout the year so that you can file your taxes accurately and on time. And don’t forget to keep accurate records of your business expenses so that you can claim these write-offs when you file your taxes.
If you are in San Diego and need support with your local Business Taxing guidelines, make sure you read more about Business Licenses In San Diego County as well as Applying for a Business Tax Certificate to keep your status in order.
Full disclosure: I’m sharing what I’ve learned since starting my business as a brand photographer in 2019. Make sure to consult with a tax professional to ensure that you are taking advantage of all the deductions and credits you are eligible for.
How do YOU prepare? Share in the comments below.