With the fiscal year coming to an end for many businesses, filing for taxes can seem like a daunting task. Whether you are the owner or employee of a small to medium-sized business, accounting software, such as QuickBooks, can help you manage payments, bills and payroll.
Here are some tips to get the most out of your fiscal year end procedures:
1. Keep track of all the expenses:
To help maximize your deductions, keep a record of your receipts, deposit slips, agreements, and invoices. In addition, you may be able to deduct your mileage, travel expenses, accommodations, and some meals. Be sure to have supporting documents.
2. Purchasing assets:
Asset depreciation usually must be made over several years, and your business can only claim half of the annual depreciation in the year of the acquisition. It may make sense to make a major capital purchase towards the end of the fiscal year to utilize the write-off sooner.
3. Home office expenses:
For those using a home workspace for more than 50% of the time, you may be able to deduct a portion of your home office expenses, such as utilities, house insurance, property taxes, mortgage interest, office equipment, maintenance, and more. These expenses cannot be used for creating a loss; however, the unused portion of deductible expenses can be carried forward.
4. Plan for salary or dividends:
As an owner of a business which generates an income, you may decide to be compensated in the form of a salary or dividends. Remember that, for taxes on corporations, you may deduct salary as an expense but not dividends.
5. Keep your business account only for business transactions:
Any deposits will be treated as an income, unless proven otherwise. For deposits that are not income (loans, transaction reversals, or refunds), be sure to keep all supporting documentation.
6. File on time:
Paying a late-filing penalty can put a dent in your profits. Consider online filing to save time and hassle, and to minimize inaccuracies.
To learn or refresh your skills on popular accounting software, check out VCC's part-time QuickBooks desktop courses offered through Continuing Studies. Taught by instructors with years of industry experience, these classes offer hands- on training using scenarios that mirror real-world situations.