Apr 03 Effective Business Tax Practices

There has never been more readily available business tax advice and information than there is today. Of course, in order to capitalize on the resources, often available free of charge, that exist, business owners and operators must be able to effectively navigate the sea of information and be smart enough to tease out the ideas that are relevant to their particular situation. Perhaps even more difficult than researching and identifying helpful information is translating the advice into actual business practices. Often, the only way to develop this productive habit of finding the information one needs and then acting on it is through trial and error. Over time, business owners can become better at noticing what will work for them and learn how best to adapt and apply the tax strategies.

 

The good news is that the business owner who is willing and able to learn to execute tax strategies has added a formidable tool to his or her business skill-set. While there is a glut of tax information out there, much of it is related to tax practices that are reactive in nature; for example, how best to solve certain tax problems. Here are some basic strategies for proactive business owners who are looking instead to turn their tax situation from a potential liability into an asset.

 

Finding Good Deduction Balance

 

Getting a good handle on a business’s tax deduction situation is crucial. There are many tax deductions—expenses that businesses can subtract from their adjusted gross income when they total their taxable income—available to businesses. Even though these deductions can have a dramatic impact on a business’s bottom line, many businesses fail to utilize the rules to their full potential. One reason it is so difficult to use tax deductions as an asset is it is possible to err in either direction. On one hand, many businesses claim too many deductions, and on the other hand, many businesses are not aware of the full range of deductions available to them. A New Jersey business tax service provider can help optimize tax returns to achieve the greatest financial benefit.

 

 

Keeping Good Records

 

This practice dovetails with the first practice. A major component of claiming tax deductions in an effective manner is keeping track of deductible expenses. In the event of an audit that is focused on a perception from the IRS that a business has claimed too many deductions, a thorough record and description of the deducted expenses can help a business escape the situation unscathed. Good record-keeping is beneficial outside of tax time as well, and can go a long way in increasing the overall efficiency of a business.

 

Finding Good Help

 

While many business owners are reluctant to reach for outside help, those who do partner with accounting professional often find it to be a worthwhile experience and more of an investment than an expense. Business owners are more likely to use business consulting in the event of an emergency situation such as an audit, but in keeping with the advice related to organization, it may be wiser and more financially sound to anticipate potential issues and work with a professional to optimize financial practices before there is an issue. Though turning over business responsibility to someone outside the company may be stressful, it can help if the financial advisor has a proven track-record of success in the business’s industry with businesses of comparable size and circumstance.