Cleveland’s Antoinece Robin Boyd shares tax preparation tips for small businesses

Antoinece Robin Boyd

Antoinece Robin Boyd is a Cleveland accountant with over 20 years of experience working with small businesses, corporations, and entertainment companies large and small. In the following article, Robin Boyd discusses small business tax preparation and shares 7 tips to prepare for filing season.

Preparing for corporate tax is complex, especially for small business owners who haven’t made the journey to becoming professional accountants. But those who adhere to proper accounting practices always find tax season easier.

Cleveland’s Robin Boyd says that contrary to popular belief, tax planning shouldn’t be an annual event just before filing. Instead, it should be an ongoing process in the background of day-to-day business operations.

Every small business owner based in the United States has to pay taxes. The exact amount varies by company structure and state, but it’s arguably one of the biggest costs. In fact, the average small business pays a 19.8% tax rate on its income.

But they’re not just one of the biggest expenses; they are also one of the most important. Antoinece Robin Boyd says small business owners who file their taxes inaccurately, late or not at all face fines and even prosecution.

Luckily, owners can get through tax season pretty effortlessly by following seven top preparation tips.

#1 Understand financial jargon

The accounting world involves terminology not found elsewhere. Small business owners who take the time to learn the most common phrases always find filing easier.

Antoinece Robin Boyd says some common accounting terms that all entrepreneurs should know are:

  • revenue — The amount earned from product sales.
  • Cost of Goods Sold (COGS) — The manufacturing costs of the products.
  • net sales — The total profit achieved after all expenses have been subtracted from the total income.
  • gross profit — The money that remains after deducting the COGS from the earnings.

#2 Keep accurate records

According to the minds at LegalZoom, keeping organized records is the number one way to ensure business owners get through tax season smoothly. While many see it as a chore, they’re always grateful that they put in the extra effort when archiving time comes up.
Antoinece Robin Boyd states that accurate records provide a consistent snapshot of company finances, pointing out profitable areas and those falling short.

When it’s time to file, business owners save time and money after keeping accurate records throughout the year. You’ll keep the deadline panic at bay and avoid the mad search for receipts.

#3 Proper Classification for Small Businesses

Cleveland’s Robin Boyd reports that small business owners who misclassify their business often overpay.

Companies can be classified as follows:

  • C Corporation
  • S Corporation
  • Company with limited liability
  • Limited Liability Partnership
  • Individual Member LLC
  • sole proprietor

The classification you choose affects how much tax the company pays.

Most owners find it helpful to speak with a professional accountant and/or attorney to determine how they should classify their business.

Antoinece Robin Boyd#4 Separate personal from business expenses

The IRS doesn’t like it when personal expenses get mixed up with business expenses. Antoinece Robin Boyd explains that mixed money prompts the IRS to scrutinize business owners’ personal accounts.

As a general rule, owners should have a separate bank account for business expenses to avoid confusion and ambiguity.

#5 Set aside cash for payroll taxes

Small business owners who employ workers must report, withhold, and fund payroll taxes.

The IRS collects the following three types of taxes per employee:

  • social security contributions — Employers pay 6.2% on half of an employee’s earnings.
  • federal income tax — The percentage changes depending on personal expenses and salary.
  • Medicare tax — Employers pay 1.46% on half an employee’s wages.
    Today, most entrepreneurs opt for payroll apps to simplify this process and avoid miscalculations.

#6 Know what to write off

The lower the profitability of a company, the less taxes it pays. Small business owners can use tax-deductible expenses to reasonably (and legally) reduce their profits, explains Cleveland’s Robin Boyd.

Businesses can write off any expense that meets this criterion:

  • The effort is ordinarywhich means it’s commonly used by other companies in the same industry.
  • The effort is necessarymeaning it supports the growth or survival of the business.

#7 Hire the right tax professional

Because small business owners don’t typically enter the business to become finance professionals, hiring an accountant can be vital to the financial health of the business.
Antoinece Robin Boyd explains that those who work with an accountant year-round prove beneficial because they have an accurate understanding of credits and deductions, ensuring businesses are saving as much money as possible.
In addition, accountants can help choose business structures, develop tax strategies, and maintain bookkeeping for accurate records.

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