1. Avoiding Penalties and Interest: Paying taxes promptly is essential to avoid penalties and interest charges from the Internal Revenue Service (IRS). Small business owners are typically required to make quarterly estimated tax payments throughout the year, ensuring that their tax obligations are met in a timely manner. By accurately estimating and paying your taxes on time, you can steer clear of penalties and interest, saving your business unnecessary expenses.
   
2. Better Cash Flow Management: Paying estimated taxes allows small business owners to proactively manage their cash flow. By setting aside funds for taxes on a regular basis, you can avoid being caught off guard by a large tax bill at the end of the year. This practice enables you to budget more effectively, ensuring that your business has sufficient liquidity to cover tax liabilities without disrupting your day-to-day operations.
   
3. Minimize Year-End Tax Burden: Making estimated tax payments throughout the year helps in spreading your tax liability over a longer period. By doing so, you can minimize the burden of a substantial tax bill at the end of the year, which can strain your finances. By accurately estimating your income and expenses and making timely payments, you can better plan for your tax obligations, maintaining financial stability for your business.
   
4. Improved Tax Planning and Forecasting: Engaging the services of a reliable accounting firm like TNT Accounting Services can greatly assist small business owners in estimating their tax payments. Experienced professionals can analyze your financial situation, project your income, and determine the appropriate estimated tax payments for each quarter. By leveraging their expertise, you gain valuable insights into your tax obligations, allowing you to plan and allocate resources more efficiently.
   
5. Peace of Mind and Compliance: Fulfilling your tax obligations through estimated tax payments not only ensures compliance with tax regulations but also offers peace of mind. As a small business owner, you can focus on your core operations, knowing that your tax affairs are in order. By partnering with a reputable accounting service provider like TNT Accounting Services, you can rest assured that your estimated tax payments are accurately calculated and filed on time, relieving you of the administrative burden and potential stress.

Estimated tax payments are a vital tool for small business owners, providing numerous benefits such as penalty avoidance, better cash flow management, reduced year-end tax burden, improved tax planning, and peace of mind. By working with a trusted accounting service like TNT Accounting Services, you can navigate the complexities of tax obligations effectively. Embrace estimated tax payments to ensure the financial health and success of your small business.

The post The Benefits of Estimated Tax Payments for Small Business Owners first appeared on TNT Accounting Services, LLC.

The post The Benefits of Estimated Tax Payments for Small Business Owners appeared first on TNT Accounting Services, LLC.

Any reduction in tax that you can find will be vital for their survival. Even the IRS acknowledges that you must keep some money to live on and run your enterprise. Minimizing taxes may be the difference between a profitable business and one that is just scraping by.

Like timing income and expenses, some small businesses must accomplish tax savings strategies before the end of the tax year. But others, such as funding a retirement plan, can be done at any time before you file your tax return.

Different Ways We Can Reduce Your Tax

• Tax credits are the federal government’s way of encouraging businesses and individuals to do things—or not do something—that affect the greater good. You can take tax credits for hiring employees, going green, providing access to disabled employees and the public, and providing health coverage for employees.

• Businesses can take tax write-offs on business equipment, machinery, vehicles, and sometimes even real estate. These write-offs can sometimes be taken in the first year you own and use the equipment.

• You can deduct up to $25 per person from the cost of gifts given to customers and vendors. An exception exists for those that bear your business name, are distributed as a matter of course, and cost less than $4.

• Timing your income involves moving it from one year to another. You first have to determine the year in which you expect to pay the most in taxes. Review your current expenses before the end of each year and prepay some of those amounts if you want to reduce your income for the current year. You can also increase your expenses and decrease payment by making expenditures such as stocking up on supplies.

Review Your Accounts

• The end of the year is also the time to review your customer accounts if your business operates on the accrual accounting method. First, find those customers who aren’t likely to pay you. You can write off the amounts they owe as “bad debts” and deduct them from your business income to save on taxes.  Bad debts can also include loans made to clients, vendors, or employees who don’t pay you back.

• Consult a tax professional before making any decisions that can affect your business tax return or spending money for the sole purpose of saving on taxes. Make sure you select someone who can help you all year, not just at tax time. Consider hiring an expert who can represent you before the IRS in case you ever get audited.

• Keeping track of your spending is easier than ever these days, but it can still seem daunting to some. Most credit cards will send you a year in review, and all of your bank transactions are available online. While online banking has made things a lot easier, there is still plenty of room to miss something. Use accounting software like Quickbooks to make things easier for you.

• Too many people who work from home are afraid of taking the home office deduction. If you work from home, at least look at if you qualify for this tax deduction. You may be surprised by how much money you can save.

Wise Planning

With wise planning, you can reduce your taxable income as a small business owner and keep more of your money working for you. Just remember to consult a tax professional to make sure you qualify for the potential savings discussed here. Contact us today to find out how we can help you and also what tax credits might be available for you.

The post Tips For Tax Reduction For Businesses first appeared on TNT Accounting Services, LLC.

The post Tips For Tax Reduction For Businesses appeared first on TNT Accounting Services, LLC.

The post New 1099 Form Rules first appeared on TNT Accounting Services, LLC.

The post New 1099 Form Rules appeared first on TNT Accounting Services, LLC.

During this busy tax season, most business owners are frantically thinking about how they can maximize their deductions. With tax returns due by April 15, if we haven’t already prepared beforehand it may be too late to implement an efficient investment strategy for minimizing our tax bill.

Tax planning strategies can defer some of your current year’s tax liability to a future year, thereby freeing up cash for investment, business, or personal use. This can be accomplished by timing when certain expenses are paid or controlling when income is recognized.

For most small businesses, every penny counts. Not only do you want to optimize revenue, but you also need to minimize your tax liability. 

A Wise Investment

Seeking expert advice is a wise investment in minimizing tax & protecting your wealth. Accountants do more than tax filing; they can take a comprehensive assessment of your finances and create a forecast through the year to keep your business in a healthy, prosperous state. 

At TNT Accounting we offer a customized Tax Strategy Plan to our small business clients. The plan includes 2-4 tax strategies that can be implemented in the taxpayer’s business to save money throughout the year.

We prepare tax returns for both individuals and businesses in all 50 states. Individual Returns, Schedule C for Sole Proprietors, Rental Returns, Partnership, and Corporate Returns (1120 and 1120S). We also file Sales and Use Tax Returns and assist with estimated tax payments. We’ll take the headache out of all your tax planning and problems.

We can support you by easily identifying these potential deductions throughout the year and advise you on how to make strategic decisions for year-end deductions. Many business owners forget to track and account for items like depreciation, out-of-pocket expenses, and home office space.

Reasons for Tax Planning

Many small business owners don’t realize that a staggering 80 percent of U.S. businesses fail within the first 18 months. Typically, one of the main causes is poor financial management. 

Despite this, many business owners go it alone when it comes to managing their money. Getting help early will save you valuable time and money in the long term.

There are a number of ways we can help you reduce your taxes. These include:

• Contribute to a Retirement Account
• Open a Health Savings Account
• Use your side hustle to claim business deductions
• Itemize State sales taxes
• Adjust Your Basis for Capital Gains Tax
• Don’t Forget State and Local Tax Breaks

Tax Strategies:

• Proper record-keeping to maximize all your deductions
• Picking the right entity to avoid double taxation
• Retirement planning
• Hiring your children to work in the business

How to Keep Your Records in Check

Record keeping is a tedious element to owning your own business that is so important but a pain to do. However, it must be done. Whether it be for taxation or legal purposes, not having your records stored could lead you into deep trouble. 

Fortunately, there are some great methods that make the whole process simpler, and once utilized will speed up the whole process like using an Accountant for example.

If you did not do any record-keeping, come tax time, you could be throwing money down the drain. When tax time comes knocking, having all records of your expenses will help you take advantage of every deduction or tax credit that you are entitled to.

The life of a business owner can be isolating, especially when you’re left with a pile of receipts and invoices to plow through at the end of the month of the year. It doesn’t have to be that way. If you hire us as your accountants we can help you plan your taxes ahead of time and save you money.

The post Tax Planning Is a Wise Investment first appeared on TNT Accounting Services, LLC.

The post Tax Planning Is a Wise Investment appeared first on TNT Accounting Services, LLC.

The Internal Revenue Service (IRS) reports that more than 80 million taxpayers use paid professionals to complete and submit their tax returns. And it certainly does make it easier and less stressful for all parties involved.

If you’re one of these 80 million taxpayers, it is important to organize your receipts, forms, and other documents well before tax time. Your preparer (like us) may take information directly from you or ask you to complete a questionnaire. Either way, you’ll need time to gather everything you—and your preparer—will need. Here are the steps to take.

• Even if you hire someone else to prepare your tax return, you’ll need to do some of the advance work yourself—and the earlier you start, the better.
• Round up your receipts and check that you’ve received all the forms you need from employers and financial institutions.
• Last year’s tax return can be a good guide for making sure you aren’t missing any important information.

The sooner you meet with your preparer, the sooner you should be able to complete your return (even if you decide to file for an extension). If you anticipate a refund, you’ll get that sooner, too. If you wait too long to schedule an appointment with a tax preparer, it might not happen before April 15th, and you could miss out on opportunities to lower your tax bill, such as making a deductible contribution to an IRA or a health savings account.

Gather Your Documents

By the end of January, you should have received all the various tax documents that you need from your employer or employers, as well as from banks, brokerage firms, and others with whom you do business. For each form, check that the information matches your own records.

These are some of the most common forms:

• Form W-2,⁵ if you had a job.
• The various 1099 forms that report other income you received.
• Form 1098,¹¹ reporting any mortgage interest you paid.
• Form W-2G,¹² if you had certain gambling winnings.

Round Up Your Receipts

Which receipts you’ll need to provide depends on whether you itemize your deductions or claim the standard deduction. You’ll want to choose whichever produces the bigger write-off, but the only way to know for sure is to add up your itemized deductions and compare that with your standard deduction. For the 2020 tax year, the standard deduction for single taxpayers is $12,400 and for married couples filing jointly it is $24,800.

In particular, look for receipts for medical costs not covered by insurance or reimbursed by any other health plan, property taxes, and investment-related expenses.

The better organized your records are, the less time it will take a preparer to process your taxes, which translates into lower fees for their service.

List Your Personal Information

You probably know your Social Security number, but do you know the Social Security number of each dependent you claim? You’ll want to jot those down, along with any other information your tax preparer is likely to need. For example, if you own a vacation home or rental property, note their addresses. If you sold a property in the past year, note the dates you bought and sold, the amount you originally paid, and how much you received from the sale.

Plan Ahead for Any Refund

If you expect a tax refund, you have several options for how it’s handled.

• You can apply some or all of the refund toward next year’s taxes. If you normally pay estimated taxes throughout the year, that can help cover the first quarterly installment.
• The government can send you a check or deposit the refund directly into your checking or savings account.
• You can contribute some or all of your refund to certain types of accounts (IRAs, health savings accounts, education savings accounts) or buy U.S. Savings bonds through Treasury Direct.

Find a Copy of Last Year’s Return

If you use the same preparer that you used last year, they are likely to have your previous information. If you are going to use a new preparer, last year’s return can serve as a reminder to the preparer—and you—of some items you don’t want to overlook. Here are two examples:

• Interest and dividends. Last year’s return should indicate which banks, mutual funds, or other financial institutions sent you 1099 forms. Use that list to make sure you received 1099s from them again this year (unless you closed those accounts or sold the investments in the meantime).
• Charitable deductions. If you made small gifts, you may not have received any acknowledgment from the organization, but you can still deduct these contributions as long as you have a canceled check or other proof. Consult last year’s list of organizations you donated to and see whether you made similar gifts this year.

The Bottom Line

Whether you do your own taxes or hire someone else to handle it, keeping good records will save you time and, in the case of a paid preparer, money. The earlier you start, the more smoothly it should go, and the sooner you’ll have put the process behind you for another year.

The post Prepare Your Tax Return BEFORE the Tax Deadline first appeared on TNT Accounting Services, LLC.

The post Prepare Your Tax Return BEFORE the Tax Deadline appeared first on TNT Accounting Services, LLC.