May 1st 2023.
Are you a new business owner looking for ways to simplify your accounting and taxes? If so, you're in the right place. The post-pandemic era has brought with it an immense labor shortage in the world of accounting and tax preparation, especially for small businesses and startups. That's why it's so important to keep your small business accounting and taxes as simple as possible.
Luckily, there are several hacks you can use to simplify your accounting and taxes. For starters, consider operating your business as a sole proprietorship. This will vastly reduce the amount of paperwork you need to do and make tax filing much easier. If you are concerned about legal liabilities, you can also form a limited liability company (LLC).
Another way to simplify your bookkeeping is to use cash basis accounting. This means you count income when you receive payments and expenses when you make payments. This is much simpler than accrual accounting, which can be quite complicated. Additionally, you should keep your capital structure as simple as possible by using owners equity to fund your business instead of debt.
Staying organized is also critical for keeping your accounts in check. Keep your balance sheet sparse by avoiding any extra assets, such as vehicles. You should also try to write off any supplies that cost $2,500 or less, as long as they last a year or less.
Finally, consider using a SEP-IRA plan to provide a pension option for yourself and your employees. This will allow you to contribute up to 20 percent of your business profits up to $60,000 a year. You should also outsource your payroll to a company like Gusto.com to ensure everything is done correctly.
When it comes to working with CPAs or bookkeepers, try to schedule your work outside of tax season. This "shoulder season" falls between April 15 and the fall extended tax return season and is usually a much less hectic time of year.
By following these six hacks, you can greatly simplify your small business accounting and taxes. This will save you time, money, and energy in the long run, so it's definitely worth considering.
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