Most states require businesses, as well as people, to pay taxes. Governments use taxes collected to fund government projects and maintain public facilities like parks, roads, and museums. Failure to pay taxes results in hefty penalties and fines that’ll eat into your business profits. And as a business, you want to avoid penalties as much as possible. 

How, then, do you ensure that you don’t incur penalties? It’s all about organizing your business taxes. Here’s how to do this:

• Hire An Accountant

Independently handling your taxes can be hectic. You have other business operations to execute, which could be time-consuming. There’s a high probability you’ll hastily handle your taxes to return to your core operations, which may result in filing errors and, worse, penalties. 

Hiring a small business accountant can assist you in organizing your business taxes better. An accountant, well-versed in tax regulations, will skillfully handle your tax filing to ensure accuracy and a seamless process. Hence, it’s best to hire a qualified and experienced accountant for your taxes. Ask to see their certifications and client portfolio for verification.

• Open A Business Bank Account

One issue that arises when filing for taxes is filing the wrong amount. It often arises if you hold your business and personal finances together. With taxes being based on your business income, you’ll likely get the figures wrong. 

However, opening a business bank account will help you get your taxes right. All your business money for each financial year will be in one account. There’ll be no guesses on your income or in calculating your taxes. You’ll file the right amount of taxes and be on the right side of the law.

But make sure to open a business account at a reputable bank. They will bank will offer convenience and ideal customer service as you bank with them. Also, make sure your chosen bank account with minimal to no transaction fees.

• Keep All Your Receipts

Arriving at your taxable income requires knowing your total income and expenses for the financial year. The challenge in getting these two figures is often the expenses. Tracking what you spend in a year can be hard. As a business looking to earn profits, you want to reduce your taxes to the bare minimum. Therefore, missing an expense or two can make a big difference in your taxes. 

Reduce the possibility of missing out on an expense by keeping all your receipts. Receipts acknowledge payments. Therefore, keeping all your receipts will show you all the payments you made and keep track of your operational expenses. 

To safe-keep your receipts, consider having a folder purely meant for receipts. Also, ask your workers to request receipts for all their daily expenses, whether for work trips or lunches, as they fulfill their responsibilities. 

Going through your receipts near the tax-filing period can be overwhelming. So, it is best to reconcile your receipts monthly. By the time you’re filing, you’ll be dealing with ten figures instead of thousands of receipts.

Know All The Tax Regulations

As stated herein, wrongful tax filing is one of the challenges your business may face. It could be delayed filing, filling out the wrong tax form, or incomplete filing. All this could lead your business to penalties, eating into your business finances. 

However, knowing all the tax regulations eliminates the possibility of filing errors. You’ll better organize your taxes. 

Common tax regulations are the deadline for submission, the forms to file, and the documents to use for the process. It’d also help to have the month of submission in mind. This knowledge allows you to prepare psychologically and physically for the filing. Consider filing your taxes before the due date to avoid last-minute pressure. Otherwise, you’ll make numerous errors. 

It’s important to note that tax regulations differ between states. Therefore, if you’re running businesses in different states, find out what applies to each state and adhere accordingly.

Keep All Your Tax Records

Governments regularly conduct business tax audits to identify businesses running fraudulently. Most of these agencies want to ascertain you filed the right taxes based on your financials. Such times can be stressful, especially if you don’t have the records. You’ll be perusing file by file to get what you need, which might irk the agencies’ interests.

Having all your tax records intact will save you from all the stress and frustration as you try to prove your case. Keep a folder of all your tax records, preferably for the past six or seven years.

Conclusion

Effectively organizing your business taxes is crucial for avoiding penalties and ensuring compliance with tax regulations. By hiring a knowledgeable accountant, opening a dedicated business bank account, maintaining accurate records of receipts and expenses, staying informed about tax regulations, and retaining your tax records for a sufficient duration, you can successfully manage your business taxes. Implementing these strategies will save you time and resources and protect your business from financial setbacks due to tax-related issues.