JACKSONVILLE, FL / ACCESSWIRE / December 5, 2020 /With 2020 coming to an end, and tax season right around the corner, many individuals and business owners will be seeking assistance with tax preparation and tax planning for the new year. In today's story, we're discussing taxes and how to properly navigate this tax season.
Tax season is a big deal every year, but it doesn't have to be if you take the right precautions and work with the right people. "Taxes can affect so many parts of your life. If you are looking to purchase a home or even secure funding for your business you need to be very meticulous about the way you file your taxes. A lower AGI can affect how much you may qualify for in other areas; be sure to discuss your goals with your tax professional prior to filing your return," - RoseAllure Louis, Capital Funding 360.
Sometimes consumers fear tax season because they owe the IRS money. Kenya Harris EA advises that "the most essential step in tackling tax debt is filing your tax returns on time even if you know you owe. This shows the IRS that you are ready to be compliant and they will be more willing to work with you."
This upcoming tax season will be a new experience for everyone, COVID-19 has had a global impact. "Some consumers have been tapping into or suspending their retirement savings to make ends meet during this COVID-19 pandemic, and although understandable, it is important to resume savings as quickly as financially possible. Still, others have simply been ignoring the need to save for their retirement, which can have an unpleasant result when it comes time to retire. Many tax-benefitting retirement options are available." - Tawanna Bryant -Osborne, MBA.
Other consumers have taken a leap of faith this year and started a business during the pandemic. "As you transition from a consumer to the CEO, your responsibilities get heavier. Money is coming in and you have to spend more money to keep it flowing. It's important to know and keep track of where your money is going, where it's coming in from, and where those funds should be allocated. Understanding your financials is vital when you are legally operating a business. No shortcuts should be taken. Take the time now to get your affairs in order or pay big later" - Falisha Ball, Accountant & Tax Strategist.
While making that transition many business owners simply focus on sales while neglecting their financials. "A combination of proper Tax and Financial planning will put one in the best position of growing wealth and minimizing taxes" Haley Nguyen, MBA, CPA, CFP®.
Albert C. Hurston Jr., CPA says, "Organization is key! Tax preparation is not the same thing as a tax strategy. Having a strategy in place is how businesses save thousands. The current tax position should be continuously scrutinized and tax strategy should be ongoing to manage tax liability as things change throughout the year."
"Organizing your business finances throughout the year is the best thing you can do. Categories can include owner pay, operations, taxes, and more. By organizing your money you have a clear understanding of how much you can allocate in each area, and you can save for taxes you might owe. Additionally, having your money split up makes bookkeeping much easier when it's time to categorize your transactions. Money organization and planning are the first steps towards reducing your tax bill, it helps you filter out the noise so that we can put an effective tax plan in place." - Kai A Dumont, Top Shelf Financial.
"When you are getting started with organizing your business financials having a good accounting system in place will aid in organization and make tax preparation much smoother during tax time. Additionally, business owners should take the time to ensure they aren't commingling business and personal funds." - Carla Gallien, Creole Financials.
Hiring a professional is typically recommended when addressing your record-keeping, but should you decide to bootstrap your bookkeeping you should be sure you have the proper knowledge. Many business owners default to using Quickbooks for ease of use, but keep in mind "QuickBooks Online does not do the bookkeeping for you. It's simply a software to consolidate all of the many transactions happening in your business. You still need to set up your integrations, set up your Chart of Accounts, and properly allocate funds. It is important to hire a professional if you don't have the expertise to handle these transactions properly. - Lanesha D. Mohip, MBA, MHRM.
"Travel deductions are one of many deductions you can take as a business owner. The costs that can be deducted include airfare, bus or train fare, car rental, and Uber/Lyft rides, hotels and meals, and even tips! Use your business bank or credit cards to make these purchases and for easy tracking. If you pay with cash, keep your receipts! Keep your itinerary statements in a secure folder like google drive, " says Rue Gumunyu, Tax and Accounting Strategist.
Another missed deduction is an annual meeting or employee appreciation event. "Throwing a party for your employees is 100% tax-deductible, as long as everyone at the party is an employee. If friends, family, and acquaintances are present only the portion related to employees is 100% tax-deductible. It would be a wise idea to get with a professional to make sure you're in compliance and to get the best deductions" - Shane Harris.
Businesses in particular industries need to take time to ensure they are following the necessary regulations. "The IRS recently released guidelines for Cannabis business owners. The guidelines specifically mention negligence penalties under section 6662 for failure to keep adequate books and records in cases where an audit ends with the IRS proposing adjustments. In order to do Cannabis accounting correctly, GAAP and cost-accounting are an absolute necessity. If you're not doing correct GAAP/cost accounting then you're paying too much taxes! If you are taking too many incorrect deductions without doing proper monthly GAAP/cost accounting you're making your business a target for an IRS Audit. It is imperative that Canna businesses hire Accountants and CFO's who are experts in the Cannabis accounting space." - Christianie Victor-Carty, Victor & Associates
LeAnna Miller - Cannabis Accountant & Tax Strategist emphasizes that "immaculate record-keeping can be the difference between surviving an IRS audit and having to pay significant penalties or even worse - closing your business. With cannabis still being federally illegal, it is imperative that business owners in this niche keep clean, transparent, and easy to access records. The implementation of good record-keeping systems will also help maximize deductions as they relate to Internal Revenue Code 280E as well."
As many industries move toward solely relying on electronic forms of payment, some industries are still cash-based. Bryanna Barrow, The Cosmo Tax Pro "highly recommends beauty professionals to eliminate cash and accept traceable forms of payments through online platforms. Because the beauty industry is such a cash-based business, they are least likely to report all taxable income and increase their chances of being audited."
Each tax situation will vary from person to person, but everyone should always be sure to "save all of your tax returns. After you file, save the paper and/or electronic copies with the rest of that year's financial documents for at least 7 years. If the IRS suspects you underreported your gross income by 25% or more, they have up to six years to challenge your return." Colette Woods, West Harbour Financial Group.
About Top Shelf Financial:
Top Shelf Financial is a financial services firm dedicated to educating consumers on tax and personal finances. We have taken advice from other industry professionals in hopes to help various consumers and business owners in this upcoming tax season
SOURCE:Top Shelf Financial
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