Tax Filing Tips for Small Businesses: How to Make It Less Stressful

Filing the tax forms at the right time is a headache for all businesses, big or small.

However, things get slightly more complicated for smaller companies because they do not have a full-fledged accountancy team that most big businesses can boast of.

So if you are the owner of a small business, then you can contact Bradford accountants to make your life easy.

So here are a few simple tips to reduce the stress associated with filing tax returns.

Ways In Which You Can Make Your Tax Filing Easy

1. Have A System Of Deducting Tax At The Source

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If you are the owner of a small business, establish a system of deducting taxes at source. If you are hiring the services of a freelancer or paying some money as commission, then you must deduct tax at source.

If you do not deduct tax at source, that amount cannot be used for deductions at the end of the financial year.

2. Maintain A Clear Distinction Between Your Business Revenue And Your Personal Income

Many small businesses operate with few employees and limited resources, yet this does not mean that the owner’s personal account should not be kept separate from the account of the business.

Your balance sheets become complicated if you have too many entries in your account. So if you do not want to attract the attention of government agencies, it is better to separate your personal and corporate accounts at the very outset of your business.

3. Know The Basics Of Accountancy and Finance

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If you own a small firm and you do not have the monetary resources to hire an accountant, you will have to do the paper related to taxes all by yourself. So it will be helpful if you know some basics of accountancy and finance.

So even before you venture into maintaining accounts, you should know the meaning of terms like revenue, cost of goods sold(COGS) etc.

If you want you can take a short accountancy course of three or four months. And these will ensure that you are not a novice when you begin handling your own balance sheets.

4. Maintain Proper Accounts And Keep A Tab On Reliefs That You Can Claim

As far as small businesses or startups are concerned, getting all the deductions possible will go a long way in ensuring that the final tax bill is as low as possible.

So here is a list of common deductible expenses that you should maintain accounts for:

• Deductions For Making Capital Expenditure

Capital expenditure means the money that is spent on buying assets that give long-term returns.

Capital expenditure results in a major outflow of money for all businesses.

So if you are the owner of a small business and if you have spent money on buying a new office or a new computer, you can claim a deduction for it in your corporation tax return.

• Relief Due To Money Spent On Research And Development Activities

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Most governments reward businesses that spend money on research-related activities. This is because research helps solve challenging problems for the human race. It leads to the economic development and social upliftment of the country.

So if you own a small business and your company has funded research work that is innovative, then you can claim as much as 20% of the money spent as tax credit while filing the tax return for your company.

• Tax Relief For Making Contributions To The Development Of Creative Industries

Relief is available if your company somehow contributes to the development of the creative industries.

However, this sort of relief is not available across jurisdictions. So depending on your home country, you have to know what kind of relief your company is eligible for.

So if you wish to claim deductions, maintain an account of all the expenditures incurred and know about the tax reliefs available in your country.

5. Feel Free To Use An Accounting Software

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Accounting software can automate a lot of functions. So you do not have to manually fill in all the entries. This saves a lot of time and reduces human errors.

However, there is software that is available in the market, so you must consult a knowledgeable person before buying a particular program.

6. Pay Taxes Quarterly Instead Of Annually

It is always better to pay taxes for shorter intervals of time as the number of entries into the balance sheet is less.

Less number of entries means a lesser chance of committing mistakes. Also, you do have to rush every to at the end of the financial year since a lot of work would have been done in the previous quarters.

7. Keep Track Of The Value Of Unsold Inventory

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Small businesses have to keep a tab of their unsold inventory.

However, doing all the calculations all by yourself is quite a challenge. The problem becomes more acute if you own two or three stores. In that case, you should invest in an inventory management system which will reduce a lot of the trouble.

8. Hire An Accountancy Expert

Hiring an expert to file your taxes on your behalf is the best idea. Hiring an expert reduces most of your burden, and you can utilise your time better instead of worrying about taxes.

So once you have some money, do invest in hiring an accountancy expert.

An expert will not only do your balance sheets for you but also advise you on the ways in which you can manage your expenses better.

So hiring an expert will save you more money in the long term for your company.

Conclusion

Small businesses contribute a lot towards a country’s growth and development.

Most governments give a lot of deductions for small firms. But if you are to take advantage of those reliefs, then you have to first maintain your balance sheets accurately.

Tax filing and balance sheet maintenance is a daunting task for most small firms and taking help from experts, or software is of great help.