Learning & Insights

8 tips to make tax time a little easier

Filing business taxes can be overwhelming. As a small business owner, your time is precious—so it helps to prepare in advance. Here are eight tips to help ease the process.

1. Hire a trusted CPA

Talk to friends or other business owners to find a trusted Certified Public Accountant (or CPA) in your area. A CPA has the expertise to maximize your business tax deductions and support your efforts as a business owner. While there is expense involved, it's worth every penny in the long run.

2. Maintain good records

It's vital that your financial reports are accurate and updated regularly. Don't wait until the last minute to pull out that pile of receipts and try to make "heads or tails" out of them—you may miss something. Take the time each month to organize receipts and review your bottom line. A great way to stay on top of your reporting needs is to use an online software program, like Quicken® or QuickBooks®.

3. Keep business and personal records separate

While good records are critical, you must also keep your business and personal financial records separate. Any type of cross-contamination of records may cause big problems for your business over time. Talk to your CPA about how to maintain business cash flow and keep your personal expenses in check. You may need to adjust and create a new strategy each year.

4. File as early as possible

Nothing's worse than stress over the due date for electronic tax filing (or mailing). The best advice is to file early—meet with your CPA at the end of the year or in January to start the process. You may even get your tax refund (if applicable) earlier and be able to invest it back into your business (or yourself) faster.

5. Defer income to the following year

If necessary (and on the advice of your CPA), you may want to defer income until after January 1—whether you bill a client later or delay the deposit of a check. Depending on your income bracket, deferring income may make a lot of sense and may save you a significant amount of money.

6. Make year-end purchases

Sometimes it may make sense for your business to purchase items as a way to maximize your deductions. For example, do you need to update your computers or stock up on supplies? What does your inventory look like? Talk to your CPA to make the right purchases at the right time to maximize your tax deductions and other benefits.

7. Contribute to your retirement

Most small business owners don't contribute regularly to their own retirement plan—if they have one. If you do have a retirement plan, it's important to make the appropriate contributions prior to December 31 to maximize your tax benefits. If you haven't yet set up a retirement account, talk to a financial advisor to determine which plan is best for you and your business.

8. Donate to a charitable organization or cause

You may be able to take advantage of a tax deduction by donating to a charitable organization or cause. You don't have to donate money—you can donate business equipment or other items. The key is that you donate regularly. Maybe you can adopt a local school and donate paper each month, or sponsor a local event or sports team. Not only will this provide you with a possible tax deduction, but it will bring goodwill and a positive reputation to your business. Just be sure to keep all receipts and maintain records for your donations.

The bottom line

Tax time doesn't have to be stressful if you're prepared. By following these tips, you may find your preparations throughout the year offer other benefits as well.

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The information provided is not intended to be legal, tax, or financial advice. BB&T cannot guarantee that it is accurate, up to date, or appropriate for your situation. You should consult with a qualified attorney or financial advisor to understand how the law applies to your particular circumstances or for financial information specific to your personal or business situation.

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