By John Swanciger of Manta
Tax season came and went. Like every year, the weeks leading up to the IRS deadline were stressful for everyone — but especially dreadful for small business owners.
(Photo courtesy of John Swanciger)
Fortunately, much of the small business community was keen on avoiding a last-minute scramble to meet the 2016 tax deadline. Forty-seven percent of small business owners were ready to tackle their taxes head-on and file before March 15, according to a recent Manta poll.
Tax readiness isn’t a matter of chance; it’s the result of careful year-round planning and strong financial processes. For small business owners who still consider filing to be a daunting task, here are a few tips to make tax season painless — and even reduce your tax liability along the way:
Stop Using Paper Receipts To Track Expenses
Today, 30 percent of small business owners track their expenses with paper receipts, and 16 percent rely on Excel spreadsheets. Less than one-third use accounting software like QuickBooks or mobile apps such as Mint. Manual methods like paper and spreadsheet-based tracking are prone to human error, and can be easily lost or accidentally saved-over. By switching to financial automation tools to track and analyze expenses, you can spend less time on data entry and more time focusing on your company and customers.
Stay On Top Of Tax Code Changes
The U.S. tax code fluctuates often, and there are countless nuances across federal, state and local rules. In regards to sales tax, for example, nexus rules can complicate otherwise simple calculations. Nexus laws differ from state to state — and even at the city and county levels — making it hard for small businesses that sell in multiple locations to determine their tax responsibilities.
Know Your Deductions
Tax deductions can be another complicated regulatory web to navigate. Manta’s research shows that almost three-quarters of small business owners have a good handle on the deductions available to them, but it’s still a smart idea to keep up with new rules. In December, Congress passed the Protecting Americans from Tax Hikes act, which made a number of formerly temporary small business deductions permanent (including the research and development credit, and Section 179 write-offs for new and used equipment purchases).
Don’t Go It Alone
While 21 percent of small business owners are handling their own taxes this year, the majority (63 percent) have or plan to hire a certified public accountant. Partnering with a trusted advisor can not only help you file on time and achieve full IRS compliance, but also ensure that you get the healthiest returns. Certified public accountants (CPAs) frequently identify available deductions and credits you may have missed, or didn’t think you were eligible for.
The busy life of a small business owner doesn’t slow down to accommodate tax season. By automating your back-office methods, keeping track of pertinent laws and enlisting outside help, filing can be a smooth process rather than a mad dash.
John Swanciger is a seasoned technology executive with vast experience in team building, product marketing and strategic partner development. As CEO, he leads Manta to strengthen its current offerings, while expanding products and services for a growing customer base of small business owners. John brings more than 15 years of industry experience working with high-growth business-to-business and business-to-consumer companies, including Accenture, Hotwire and Starwood Hotels & Resorts Worldwide, Inc. Most recently, he was responsible for product marketing, sales, business development and partner relations as Switchfly’s chief commercial officer. John is a board director at Liftopia and received a bachelor’s degree in finance from Boston College.
The views, opinions and positions expressed within this guest post are those of the authors alone and do not represent those of CBS Small Business Pulse or the CBS Corporation. The accuracy, completeness and validity of any statements made within this article are verified solely by the authors.