small business owners wear numerous hats and are responsible for every aspect of business operations. Managing the tax filing process, along with other financial matters, can be a time-consuming task, especially if money management isn't your area of expertise. Getting a handle on financial operations can help ensure your compliance, as well as aid you in operating in a fiscally sound manner. SMBGU shares some tips on how to manage your taxes.


Securing an Employer Identification Number

The US Internal Revenue Service (IRS) assigns small businesses a federal Employer Identification Number (EIN), also known as a Tax ID Number, as an identifying code. Your EIN number is an important tool for protecting your assets, particularly because it allows you to separate your business and personal finances. An EIN is necessary for incorporating your business or partnership, opening bank accounts, hiring employees, and filing taxes. Some independent contractors and freelancers use their Social Security number in place of an EIN. Unfortunately, that approach can open you up to personal liability, identity theft, and fraud. Having an EIN also makes for a streamlined process when it's time to file state and federal taxes. Depending on your business structure and preferences, you may opt to file annually, or on a quarterly basis.

Smart Accounting Processes

Detailed record keeping can help ensure your small business stays on financial track, and that you're handling taxes, payroll, and accounting issues appropriately. You may opt to utilize the services of an accountant who specializes in small business finances or use payroll software. The right payroll software will automate taxes and forms, allow for same-day direct deposit, and offer protection in case you receive a payroll tax penalty.

Tracking expenses, handling accounts payable and receivable, and paying contractors and vendors are all important elements of small business financial management. Understanding where you are financially can also help you make informed business decisions when unexpected financial issues arise. For example, if you had to change vendors, hire additional staff, or shut down your operations temporarily due to a natural disaster, do you know what the financial ramifications might be? Staying on top of your books is critical.

Managing The Tax Filing Process

Provided you've kept good records over the year, you can file your taxes on your own, or utilize an accountant or tax preparation service to help you. Paying taxes is an essential responsibility of small business ownership, and ensuring that you're doing things right means that you'll be able to take a lot of the stress and hassle out of the tax filing process. You can find qualified professionals through business and trade organizations, or by reading online reviews and finding a professional who meets your criteria. Tax laws change from year to year, so whatever approach you take, make sure you're studying up to ensure you get all of the deductions you're entitled to.

Utilizing Government Resources

The IRS provides a wealth of information about tax filing and money management and accounting issues for small businesses, independent contractors, freelancers, and entrepreneurs. You can also reference organizations like the Senior Corps of Retire Executives, who provide advice, mentoring, and consultation services to small business owners who are learning the ins and outs of the financial operations side of their businesses. Your small business bank can also be a resource when it comes to managing your money and handling tax-related matters. While the tax filing process can be confusing, frustrating, and time-consuming, setting up a financial accounting and bookkeeping system when you launch your business can help ensure you take some of the headaches out of the process.

Article Submitted By Tina Martin