How to Survive Tax Season as a Small Business Owner
Tax season for small business owners can be chaotic and overwhelming. There is a mountain of paperwork to navigate and if not filed properly, your company (and you) could end up owing more than is affordable.
If you’re starting to feel a lump forming in your throat just thinking about tax day, use the tips in this post to navigate your way through April 14th.
1. Find a Tax Professional You Can Trust
If you’re not sure where to begin when it comes to filing taxes for your small business, or you’re getting stumped halfway through, it’s time to hire a professional.
One way to do this is to go to a company that specializes in taxes. H&R Block is one such company that has reliable workers who have experience in business (and personal) taxes. If you do not want to do this or feel better using a personalized service, then ask your fellow small business owners for recommendations.
Find someone who understands your industry and who can navigate the road of credits and deductions on your behalf.
A professional can help ensure that you will not overpay in taxes and will receive all appropriate credits and deductions. This can save you a lot of money in the end.
2. Get All of Your Paperwork Organized
The best way to prepare for tax season is to get organized. Do not stash receipts into boxes or dump them into a drawer. Nothing goes away by ignoring it; it’s better to understand what you are working with and research the answers to your tax questions before you’re pressed for time.
Don’t beat yourself up if you have not been keeping track of everything; just start figuring things out now.
Create a filing system and stick with it. Whether you use an accordion folder or web-based software, have a tab for W-2s (employee tax forms) 1099s (independent contractors), and expenses/invoices so you can always easily find your most important tax related documents.
3. Pay What You Owe On Time
After you finish preparing your taxes you may see that there is a balance due that is more than you were anticipating. Don’t panic!
Paying your taxes on time is important because it ensures you don’t end up paying past due fees or interest. However, paying the full amount right now could seriously hurt your cash flow.
What should you do?
You have several financing options at your disposal that can help you make it through tax season.
The first option, which we do NOT recommend, is to take out a merchant cash advance. Because cash advances are not regulated by the government their APRs can reach predatory levels and can leave you in a compromised financial situation for months.
You could also try to take out a business bank loan, but it’s not likely to get approved simply to pay your tax bill. Most bank loans require the cash to be used as an investment in the growth of your business. Plus, business bank loans can take weeks or months to be approved.
The best option for successful small business owners is to apply for a Line of Credit before tax day. A line of credit through ARF Financial helps successful small business owners put cash at their disposal when it’s most necessary.
A Line of Credit through ARF Financial’s network of banks can be used for many reasons including buying new inventory, starting a renovation or expansion project and improving cash flow during slow seasons or even tax season.
The great news is a Line of Credit through ARF Financial can be approved in as little as 7 to 10 business days and will put up to $725,000 at your disposal!
If you’d like to get approved for a line of credit, click here!