Small business owners are faced with a multitude of matters to consider throughout the course of their business. One critical matter is taxes. While individual taxpayers usually think about taxes each year and with a deadline for filing their returns by April 15, small business owners have to consider taxes far more often than that; four times more often than that, to be precise.
Keeping consistent and accurate records will take the small business owner far in terms of remaining on good terms with the Internal Revenue Service (IRS). Not only does it help the IRS to review a company’s records but it helps the small business itself to remain on track throughout the year, without falling behind and having the need to rifle through records and receipts in a rush of panic. Whether a small business retains an in-house human resources staff member, a staff accountant or hires an accountant on a consulting basis, they are still responsible for filing true and accurate records of their business each quarter.
Small business owners may choose to outsource their payroll responsibilities so they can maintain their daily business tasks and focus on properly maintaining the company’s receipts to ensure proper tax filing each quarter. Letting an outside company help when it comes to tracking employee hours and time off and distributing accurate paychecks frees the small business staff to focus on building the business and attracting more clients.
Besides freeing up a company’s human resources and accounting staff, outsourcing payroll matters also helps to avoid any possible IRS penalties that may incur due to late or incorrect filings each year. Since most external companies that offer this service provide a tax guarantee and take responsibility for any incorrect or late filings, the small business owner will save in worry and actual late fees or incorrect filing fees. Such a feature on its own could save a small business owner hundreds of dollars each year in penalties.
Once the small business owner has delegated some of their responsibilities, whether for daily, weekly, monthly or quarterly tasks, they can focus on some fundamental tax considerations:
- Keeping track of receipts: Small business owners should keep records of all transactions, including travel expenses, car rentals, fuel costs, entertainment, advertising, vendors, accommodations, building utilities, maintenance and repairs. If the company pays for it, they need to have a receipt for it. Additionally, the small business owner needs to keep all of these receipts in a central, easy-to-access location. If the IRS chooses to do an audit, these receipts are the keys to avoiding problems and proving expenses and deductions.
- Understanding deductions: When doing business, the small business owner will need to spend money to make their business grow. In doing so, they receive the benefit of receiving tax deductions. It is important for small business owners to understand the variety of expenses that can be deducted and how to differentiate between different costs the business will incur.
By focusing on the company’s taxes and letting a reliable third party take over the issues of pay for the company, headaches and concerns associated with preparing quarterly taxes should be greatly reduced and give the small business owner a sense of relief.