Tax Tips for Owners of Small Online Retail Businesses
Whether you auction specialized antiques online, ship mugs from China, or sell handmade artwork and crafts, you probably didn’t get into it for the taxes. Maybe you started the business to do something you love. Maybe it even developed out of a hobby. In either case, taxes may be one of your least favorite parts of the business, but you still have to do them.
In fact, even if you don’t mind paying taxes, you could probably do without the paperwork. But just like every other business owner, a small business owner is responsible for taxes as well. Here are some tips to help you navigate tax season as the owner of a small online retailing business.
1. Start Well in Advance
If you’re not extremely familiar with the process, preparing your records for tax season can easily make you feel overwhelmed. Nobody needs more stress, and if you leave it until the last minute, the tax preparation process will cause you a lot more stress than if you start early and take it one small step at a time.
2. Collect and Check Over Your Records
If you have a working system to keep track of your business expenses, sales, and other important records, you’re probably well set for tax preparation. But looking through your records could help jog your memory about something that you forgot to record, or perhaps alert you to any discrepancy that you may need to sort out.
However, even if all it does is reassure you that you’re all set, looking through your records and making sure that all your paperwork is organized in one place can still be a useful exercise. It may save time by helping you avoid a frantic search for misplaced paperwork later.
3. Note Any Changes Since Last Year
Anything about your business that’s significantly different than last year may require extra work at tax time. For instance, if your business has grown a lot and you’ve hired new employees, your business paperwork will need to include information about how much you pay your employees and about your workers’ compensation insurance if applicable.
Requirements for workers’ compensation insurance vary slightly by state. In some states, even hiring one part-time employee will require you to get this type of insurance. If you’re required to have workers’ compensation insurance, your small business may be able to claim that expense as a deduction when you file for taxes.
If anything else significant has changed since last year (for instance, if your business has taken out a loan), you’ll likely need paperwork for that as well. So go over your records and check for anything that stands out and that may require additional paperwork.
4. Find a Qualified Professional
Unless you’re the rare person who helps family members with tax paperwork for fun, you may find even your personal tax preparation challenging. And business tax paperwork can add a whole extra dimension to the challenge. As a business owner, you probably have other critical things to spend your time on, so you might as well outsource this task.
Even if everything looks good to you, a professional bookkeeping and tax service expert may still find something that could improve. For instance, they have experience that helps them find out things such as whether or not you’re taking advantage of all the tax breaks that you qualify for.
As you can see, tax season does require some planning, and for best results it should involve a qualified tax services professional. If you’re still looking for your tax professional, consider Monheit Frisch Group PLC. We can provide not only bookkeeping and accounting for your business but tax services as well, so give us a call today.