By now you have hopefully filed your business’s 2017 tax return. It probably feels like a big burden off your shoulder, but next year’s tax season will be here sooner than you know it. When it does finally arrive, it’s important to be prepared.
You can help yourself better prepare for next season by beginning those preparations now while this year’s tax season is still fresh in mind. If you had any challenges to overcome in filing this year’s return or things you wish you would have been able to do differently, now’s the time to make those adjustments before the rest of the year flies by and you’re suddenly left to play catch up.
With this in mind, here are a few tips to help small business owners get ahead on their taxes for next year:
- Develop a system now for tracking your expenses: If you were unable to list all of your business expenses on your tax return this year, it’s important you better organize your company’s expenses for next year. Save all your receipts and keep them in an organized filing system. It can help to digitize them as well. Make sure all expenses are entered into business spreadsheets or bookkeeping systems so you do not get behind with logging.
- Budget money specifically for taxes: You should meet at least a couple times a year with a CPA to get a stronger sense of what your business’s taxes will look like in the coming year. This will help you also to form a clearer financial picture that will make it easier for you to budget the right amount of money for your next year’s tax payments.
- Develop an emergency fund: Businesses should always have an emergency fund that will aid them with any unexpected expenses, such as market downturns, losses of major clients, sudden emergency building repairs or, in some cases, tax payments that are much higher than you might have expected. In your meetings with your accountant or your financial planning attorney, take some time to determine what is a reasonable figure to save up in your emergency fund this year.
- Track your miles: If you travel a lot for business, one of the easiest ways you can save money during tax season is to claim a mileage deduction. To be able to do this, however, you must track your miles throughout the year. When driving, for example, you can deduct business travel mileage at a rate of 54 cents per mile. You can also deduct based on actual expenses, which include gas, maintenance, vehicle repairs, vehicle depreciation and other costs. Other travel-related expenses can also be deducted, including hotel stays, parking fees, meals while on business and more.
For more information about ways you can better prepare yourself for next year’s tax season, contact an experienced U.S. Virgin Islands financial planning attorney.
Adam N. Marinelli is an associate in the Corporate, Tax and Estate Planning Practice Group at BoltNagi PC and concentrates his practice in tax matters. BoltNagi is a full service business law firm serving the U.S. Virgin Islands.