With so much demanded of them every day, small business owners are often experts in multitasking. Though they’ve learned how to juggle the numerous demands of running their business, tax season can still be a struggle for small business owners, as it requires additional attention and expertise. With recent changes to tax laws, filing 2014 taxes promises to be difficult. There are several things to keep in mind as you’re preparing your taxes this year – including credits and deductions, new tax rules around the Affordable Care Act and the importance of staying organized. Below are some items to keep in mind to ease your burden this spring.
Tax Credits from the Affordable Care Act
Many small business owners are concerned about the different impacts of the Affordable Care Act on their taxes. For example, if you’re paying health insurance premiums on behalf of your employees, you are eligible for a tax credit for those premiums. Also, if you have a business with 100 or more employees, you must provide health insurance to 70 percent or more of your full-time equivalent employees, or you’ll face a tax penalty. Be sure to pay close attention to such changes when filing this year.
Notable 2014 Tax Breaks
Two important tax breaks have been extended this year for small businesses. One is a $500,000 maximum deduction for the price of any qualifying equipment or software that you purchased or leased in 2014. “Qualifying equipment” can include software (such as your accounting or marketing software), computers, office furniture and/or business-use vehicles (such as a delivery van). In addition, you can depreciate 50 percent of the cost of qualifying equipment. That means you can deduct the cost and then receive an additional deduction from depreciation. Combined, these two tax breaks can result in significant savings for a small business.
Utilize the Appropriate Resources
Trying to do taxes on your own might not save you as much money as you think. Bookkeeping and filing taxes takes time—time that you could be spending growing your business, developing new products or services or helping clients. Should you choose to work with an accountant, finding the right one and developing a good relationship with him/her is crucial. Finding the right accountant is something you should consider talking to your small business banker about, as they often work closely with accountants in local communities and could connect you with one that specializes in your industry or size of business. Theycan help you stay on track with your taxes, including quarterly estimated tax payments, all year long—kind of like a personal trainer for your finances.
If you think you’re up to the task and choose not to work with a CPA, there are plenty of do-it-yourself options during tax season. The more straightforward your business is, the more it may make sense for you to use tax preparation software.
Staying organized throughout the year can save small business owners a lot of headache during tax season. This means keeping a detailed log of all travel and other expenses as they are incurred. Use whatever method works for you, whether it’s hiring a secretary, using an excel spreadsheet or handwriting the information in a notebook. Proper documentation will make tax preparation simpler, increase your money-saving options and avoid any upsetting surprises.
Want to learn more about tax-saving strategies? In March’s Bank of America Small Business Social Series, a panel discussed tax season and tips for small business owners. The Google+ Hangout was moderated by CNBC’s Carol Roth and included David Solis from Bank of America, USA Today’s Steve Strauss and Ebong Eka, CPA and small business tax expert. They discussed strategies for surviving tax season. Click here to watch the video replay.