If you’re self-employed, you may be joining the last-minute rush of individual taxpayers to get their forms in. Entrepreneurs are increasingly forming limited liability companies (LLCs), instead of incorporating, in part due to the tax advantages. So April 15 is tax day for these small business owners.
While tucking a Schedule C form into your individual return may sound like just one extra step in tax preparation , managing a small business is a bit more complicated than running a household. Tax time can also be a lot more, well, taxing. In fact, Schedule C filers may actually face a higher risk of audit than C or S corporations.
But don’t panic, it’s never too late to file an extension to buy some time and make sure you’ve dotted all the I’s, crossed all the T’s, and gathered all the receipts you’ll need to claim deductions.
There’s also no shortage of advice for procrastinators, with everyone from the IRS to accounting firms and small business groups churning out can’t miss tax tips. To help filter out all the noise, we’ve culled a list of some of the best advice — for both last-minute questions and forward-looking things to consider for your company’s future success:
For the procrastinators out there, Jamie Sutherland is here to assure you that there’s no reason to panic. The president of U.S. operations at Xero, a cloud-based accounting platform for small businesses, says the best course of action is to huddle with your accountant. But he also offers a range of advice from Xero accounting partners to ensure you can maximize your tax savings with time to spare — from taking advantage of remaining depreciation deductions to the difference between independent contractors and employees.
Deductions, deductions, deductions. There’s perhaps nothing more satisfying than finding that crumpled receipt at the bottom of your expense folder in early April that means being able to pocket a little more of your profit. Bankrate.com, a key destination for financial information and advice, offers up a clean dozen deductions that shouldn’t be overlooked — including software, office furniture and even health insurance.
Don’t worry about getting audited — prepare for it! That’s the advice of Gene Marks, head of the Marks Group, a technology consultancy for small and medium-size businesses. He lays out the facts: while a little over 1% of individual returns are audited, people making at least $1 million faced a one-in-nine chance. So while advice on how to avoid an audit is all well and good, Marks suggests staying organized and prepared in case judgment day arrives.
Like many stressful situations, tax time can be a teaching moment. Intuit, the provider of tax and financial software for small businesses and individuals, provides small business owners with some expert advice on avoiding financial mistakes — whether it’s a lack of credit history or choosing the wrong retirement plan.
A tip list wouldn’t be complete without going to the authority, the IRS. The government’s no-frills advice is always the best place to start any tax filing season, with links to forms and even an A to Z guide to business taxes.