Tax Planning and Working with a Tax Accountant for a Smooth Tax Season in Westchester County, NY

Diligent record-keeping and proactive tax planning are key to a smooth tax season. Organizing your financial records properly, taking advantage of tax deductions and credits, and ensuring compliance with tax laws will provide a seamless tax filing process. Also, this can minimize your tax liability. Working with a trusted tax accountant in Westchester County, NY will help you avoid costly tax mistakes and ensure you face the next calendar year with maximum confidence. If you own a small business, below are tax tips to keep in mind for a smooth tax season:

Organize Your Financial Records

As a business owner, you must keep up with bookkeeping all year to avoid surprises and last-minute tax preparation scrambles when it’s time to file returns. To stay organized, ensure you keep all receipts in a file system. Accounting software can be used to organize digital receipts. Also, ensure digital files are backed up as they can substantiate your tax return’s details should you lose the original file. 

Structure Your Business Properly

When picking a business structure, here are factors to consider:

• The required level of personal liability protection. Liability protection is not available to sole proprietorships. LLCs offer limited liability while corporations provide maximum protection. 
• Tax management. A sole proprietorship records income on the personal tax return of the owner. While this makes returns easier, tax flexibility is not allowed. Meanwhile, LLCs offer flexibility by being able to be taxed as a sole proprietorship, corporation, or partnership. 
• Business control. With a sole proprietorship, you can fully control business decisions. LLCs are more flexible as a member or a manager can make decisions. 

Understand the Tax Implications of Interstate Sales and Remote Operations

If you are selling products outside NY and have remote workers, understand your tax obligations. Speak with an experienced tax expert to get related information for every state. Consider the following:

• Sales tax rates. Different sale tax rates may apply to products sold interstate. 
• Tax withholding requirements. For remote workers, the correct state tax amount must be withheld. 
• Employee classification. If remote employees are not classified correctly, you can pay back taxes and penalties. This usually takes place when you classify an employee as an independent contractor. 

Claim Tax Deductions and Credits

Deductions and credits decrease the taxes you owe.  Plan for both from the beginning of the tax year with a tax accountant to optimize tax savings. Examples of deductions include:

• Home office deductions. If you own a business that operates from home, you can deduct home office expenses such as rent, insurance premiums, mortgage interest, repairs, utilities, and depreciation on your property’s business section. 
• Your business vehicle. Do you use your vehicle for business purposes? If so, you can deduct the relevant cost and recover the car’s cost through depreciation. Just ensure you keep records of your vehicle’s business use and deduct only the business part of use. 
• Educational materials. Usually, these materials can be deducted when associated with your line of work. 
• Health insurance premiums. These can be deducted on Schedule 1. But you must meet some eligibility criteria. 
• Business travel expenses. Job-related travel costs like rental cars, hotel costs, meals, and fuel can be deducted. 
• Office supplies. Printers, computers, ink, and paper can be deducted. 

Meanwhile, tax credits you can leverage include health care tax credits for small businesses, disabled access credits, retirement plan startup cost credits, and business energy investment credits. 

Work with a Tax Accountant

A tax accountant can look into the tax code and look for available tax benefits. Also, they can separate your personal and business accounts, help with tax planning, help organize your receipts, and prepare your tax returns accurately.