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Planning Next Year's Home Business Taxes Now

Written by: Chris Simpson

Article Overview: It's tax time, and most of us are concerned about paying what we owe for this year. After all, taxes can be pretty complicated for the self employed. However, what you should also be thinking about right now is next year's taxes!

Planning Next Year's Home Business Taxes Now

It's tax time, and most of us are concerned about paying what we owe for this year. After all, taxes can be pretty complicated for the self employed. However, what you should also be thinking about right now is next year's taxes!

A little bit of planning now can make an enormous difference in how things go in the next tax year for your home business. Let's look at some of the benefits of doing early planning, how to reduce the amount you're going to owe, and some commonly forgotten exemptions that could make a difference.

Planning in advance for your tax's next year gives you control. If you've been letting your taxes slide until the last minute - something many people do - it's probably an unpleasant and overwhelming process.

On the other hand, if you know what's coming and have a good idea what you can do about it, your trip through next year's filing season will be smoother sailing. While you can't anticipate every possibility, you can avoid a lot of the common pitfalls just by having a plan.

One important thing to do if you haven't already, and you want to get the most out of your return, is to get an accountant. Filing on your own might seem like it'll save you a lot of money, but you're not a trained professional and you don't know the ins and outs of the regulations. That's likely to get you in trouble if you're not careful!

A good accountant that you trust will save you a lot more than you pay for their service, just by knowing the optimal way to file.

Of course, your accountant can only do so much if you don't give him the proper information. Don't be tempted to leave things totally up to the professional, even if it makes the process seem easier.

You need to know what's deductible in your business and turn over every piece of information you have pertaining to your income if your accountant is going to be able to help you. In the end, it's your responsibility, not hers, to know what's going on, and knowing about your tax obligations is an important way to save in the long run.

You should also do your bookkeeping more regularly - once every month, not once every year. If you're like a lot of people and you wait until January to work on your bookkeeping, you shouldn't. Once a month is a good way to get feedback on your business and calculate the estimated tax you're going to owe.

Set up an escrow account for these taxes - if you have the money to pay estimated taxes in advance, do it! That stops you from dealing with late fees and having to come up with thousands at the end of the year. Use automated bookkeeping software - it's worth the extra cost for the convenience it allows, and it's deductible!

Prepay any deductible expenditure's before the end of the tax year to get a better result. Mortgage payments and similar expenditures are a good choice that many people forget about. Prepay state taxes, too, as well as any other business related expense that you can deduct, and there are a lot of them!

Remember to take a look at law changes, as well. Various incentives and deductions are only available for a given period of time, and may expire without your knowledge, making your taxes more complex. However, if you plan ahead and learn about what you're likely to owe, you'll find your taxes next year are a lot easier to deal with.

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Article Tags: accountant, enormous difference, home business, ins and outs, little bit, money, nbsp, pitfalls, sailing, tax time



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