Preparing your taxes involves understanding specific deductions. All of which affect your taxable income. There are some key elements or strategies, that include , materials, managing cash flow, equipment rentals, and labor costs. You can benefit greatly using various deductions. Ive had additional deductions in my business, including, advertising, home/office deductions, and professional services, like accounting fees & consultation.
Consulting with an experienced tax advisor ensures that you are compliant with all tax regulations. There are 4 accounting methods that are generally used:
- Cash basis method: Record income when it’s in your bank account and record expenses when you pay them.
- Completed contract method: Where you delay revenue and expenses for a job until it’s completed.
- Accrual basis method: Records income and expenses when they’re incurred, regardless of when the money comes in.
- Percentage of completion method: For larger -long term contracting.
Try not to wait until the end of December to start preparing your taxes. Keep financial information currant throughout the year. Here’s a quick checklist of information you need to complete your taxes efficiently.
- Determine the type of taxes for small business.
- Know your tax forms.
- Gather up forms you need to file.
- Prepare income documents
- Collect all receipts.
- Use accounting software; QuickBooks, FreshBooks, Wave.
Try not to overlook important expenses that are fully deductible, like waste disposal, permits, inspector fees, temporary electric/ water utilities, heavy equipment machinery, and soil tests.
From the start (45 years ago) I used a licensed professional accountant (CPA) and he helped me through the years giving me advice and clear future planning. Things would have been so much easier if I had software tools that are readily available today. There is industry standard software tools that can keep you on track and help you stay compliant. Eliminate trial and error and do it right the first time.
- Wave; Provides resources and tools to help you prepare taxes.
- FreshBooks: Provides several resources to simplify tax preparation.
- QuickBooks: Offers tax preparation and filing services.
Final Thoughts;
I would recommend QuickBooks because they offer full-service tax preparation, and assisted tax with an expert for guidance.