I still remember the first time I filed taxes for my business. In addition to having no idea what a write-off really was, I also didn't worry too much about guessing on the numbers. A few government audits later, I discovered what it really meant to do things the right way. Over the years, I have met lots of business owners that weren't too worried about fudging the numbers, and nearly all of them have run into problems. Proper accounting is important, which is why I created this website dedicated to business accounting. I know that if you learn the right way to do things and focus on integrity, your business can avoid a world of problems.
No one likes paying taxes but it's the act of actually having to prepare your income tax return that can especially get under someone's skin. If you are dreading having to prepare your next return, don't sweat it. It's possible to file your tax return without stressing yourself out or getting lost in a sea of complicated numbers. Here are some tips to keep in mind that might help you when your next tax filing comes around.
Track Your Deduction Opportunities
The reason tax season can be stressful is because most people don't keep very good track of their finances during the year. Then they are left scrambling trying to bring all their data and information together at the last minute. You can make your life so much easier during your next tax filing if you just start tracking all of your expenses or possible tax deductions now. For example, a freelancer that brings in revenue has the opportunity to deduct their business expenses in order to reduce the amount they need to actually pay taxes on. Start keeping a ledger now, and document every expense that comes in. That way, you won't feel so overwhelmed the next time you need to tally everything up.
There are of course plenty of other deduction opportunities out there, even if you file just a basic return each year. A local professional who offers income tax services can point you in the right direction.
Keep Last Year's Return Handy
Far too many people simply leave their finalized tax return into a drawer somewhere or shove it into a box that ends up in their basement, never to be glanced at again. However, keeping your previous year's tax return on hand is one easiest and most effective ways to make your next return easier to file. Last year's return likely has your employer's tax ID and if you are filing the same exact W-2 or papers that you filed the previous year, you'll already have a blueprint to follow for the next return. Even if your life did get more complicated thanks to buying a home, getting married, or having kids, an old tax return can still help you quickly get up to speed with the basics before you start worrying about the more complicated stuff.
Don't Forget Your Retirement Contribution Options
One of the best ways to decrease how much income tax you pay is to make use of a retirement option like an IRA or a Solo 401k if you are self-employed. Certain retirement investment vehicles are deductible, meaning you can take the money you've earned and put it directly into retirement without having to pay taxes on it. This is a straightforward and easy way to save some cash for the future that won't add anything too complicated to your return.
Share14 September 2020
