You can avoid tax issues in your business through one of the following ways:
- Using a good record-keeping system. Research what kind of documentation you need to gather and maintain for your tax needs. Ensure that you have processes in place to keep all the support you’ll need at tax time.
- Decide on the best accounting method for your business. Businesses use one of two tax accounting methods: cash and accrual. Depending on the nature of your small business, its legal structure, and its credit situation, you may consider using one of these methods.
- Stay current on your taxes and file any past due returns. If you happen to have any past due tax returns related to your business, make sure to file them as soon as possible. This will help you avoid any penalties and interest and get on the right track for your taxes. Again, if you’re current, your tax professional has more options for helping you than if you’re late.
- Clarify any unusual circumstances. Make sure that you explain unique circumstances you or your business experienced during the year with your tax professional. They will know how to treat it, and whether to report it or not.
- Report all your business income. Make sure to obtain and maintain records of all your business income. Ensure that you have matched all your records and reported the right amount.
- Review your tax return. Make sure to carefully review your tax return before submitting it. Even if you’re using a tax professional to help you file your return, ensure that you also review and understand your return before final submission.
- Seek professional advice. If you have doubts as to how to undertake this process, consider consulting with a tax professional. They can help you better navigate the filing process and submit a more accurate return.