Rely on software for tax accounting
The days of keeping track of expenses and deadlines for your small business on legal pads and other ledgers are long over.
Strategy: Use an accounting software package to do the grunt work. The most popular product on the market is QuickBooks, produced by Intuit, but there are others (see box below).
Typically, software programs like QuickBooks will coordinate tax aspects with other accounting expenses.
QuickBooks has various products geared to small business owners, self-employed individuals and individual contractors. For ease and simplicity, a desktop or laptop version can be coordinated with a smartphone that takes digital photos of receipts. This can be linked to categories of deductible expenses. It keeps track of every expense so you’re ready at tax return time.
For many small business owners, handling payroll is a hassle. QuickBooks manages the payments and accompanying tax forms, such as W-2s and 1099s. It also compiles inventory data if your business sells or manufactures goods. Similarly, it will calculate sales tax deposits needed to be made by the appropriate due dates.
If you use your vehicle for business driving, as many small business owners do, QuickBooks automates the record-keeping process and provides deduction results, based on actual expenses or the optional standard mileage deduction (53.5 cents per business mile in 2017, plus related tolls and parking fees).
And if you’re self-employed and don’t receive a W-2, QuickBooks coordinates quarterly installment payments due to the IRS on April 15, June 15, Sept. 15 and Jan. 15 of the following year (or the next business day if the due date falls on a weekend or holiday).
Tip: TurboTax for filing returns, also produced by Intuit, imports QuickBooks entries.