Tax season is a stressful time for everyone, but for small business owners, it can be especially challenging. Whether you’re among the 84 percent of small-business owners who hire a third party to manage taxes, or you manage business accounting independently, taxes are an unavoidable burden for entrepreneurs.
Here are some tax tips all small-business owners can incorporate to reduce the amount of time and money required to manage them.
Plan for Estimated Tax Payments
Nearly half of the respondents to NSBA’s survey said the financial burden of paying Federal taxes is one of the biggest challenges they face. Though quarterly estimated tax payments are required of business owners, proactive planning can help owners manage their financial implications. Establish a schedule to consistently transfer a portion of your business’s monthly income to a business account that is dedicated solely to quarterly tax payment. Create an account with The Electronic Federal Tax Payment System tax payment service (offered by the U.S. Department of the Treasury). Once your account is approved, you will receive a PIN, allowing you to schedule automated withdrawal of quarterly taxes from the designated account.
In addition to your state tax liability and estimated payment required, confirm the tax rules for the municipality in which you conduct business/earn income. You may need to pay estimated quarterly city income taxes to your local government, too.