By Uzma Kazmi, VP, Business Banking Sales Manager, PNC Bank
Business owners are experts in their fields of practice, but generally not on tax rules and regulations. As a result, tax season may be an especially stressful time for many business owners.
If you have yet to file your 2014 taxes, don’t worry, you still have time and you’re not alone. Due to juggling the facets of running a business, many small business owners, by nature, procrastinate preparing and filing taxes. PNC Business Banking warns that
seemingly small missteps in preparation throughout the year can actually hurt a business’ cash flow and bottom line when it comes time to pay taxes.
Advance preparation is key. After completing 2014 taxes in the weeks ahead, beginning to make a few small but significant tweaks can help minimize tax anxiety in the years ahead and potentially reduce the dreaded number at the bottom of the tax bill:
1) Project and pay in advance to minimize surprises
Few things can disrupt cash flow more than a large, unexpected tax bill. By using the IRS Schedule SE worksheet, small business owners can determine tax obligations for the year ahead based on last year’s return. Once this is done, businesses can pay ahead on a quarterly basis which will ensure the final tax bill at the end of the year is neither a surprise nor a drain on cash flow.
2) Treat taxes like any other business practice – Stay Organized
Lack of organization can directly or indirectly impact a business’s profitability – time spent sifting through disorganized records (think shoeboxes) as well as late penalties are just a few examples. Business owners may consider an ongoing process for archiving invoices throughout the year and/or paying bills electronically – PNC’s Cash Flow Insight is an example – in order to increase longevity, efficiency and accuracy of records.
3) What you don’t know could hurt you – Read Up On Tax Laws
Tax laws are always in flux and by not understanding them, business owners could miss out on deductions and more money in their pocket. This year, many new tax laws are beneficial to small businesses such as the simplified home office deduction and new filing deadlines to give more time to file.
4) Pay attention to commonly overlooked, underutilized deductions
Small businesses spend 156 hours working on Form 1065 and Schedule C*. Make the hours count by looking into deductions such as mileage, asset deductions, specialty deductions, charitable giving, bad debts and loan interest. Using online banking can help make this process simpler since transactions can be downloaded on PNC.com.
Keeping organized and prepared are keys managing your end of year finances and help relieve the pressure of tax season.
To learn about topics related to small business development, join us at PNC Fairfax Connection for our Banking for Business series (link: http://pncfairfaxconnection.com/banking-for-business-0). We hope to see you there.
PNC Fairfax Connection is a free community resource center at E. 83rd St. and Carnegie designed to strengthen and connect the community by empowering area residents and businesses to achieve their goals while celebrating the community’s rich history and heritage. Everyone from toddlers to teens to grandparents – individuals and business owners alike – can access innovative technology, educational opportunities, chances to connect with each other and exciting new experiences.
The center is open Monday through Saturday.
Monday (10 a.m. to 4 p.m.)
Tuesday and Wednesday (12 p.m. to 8 p.m.)
Thursday (10 a.m. to 6 p.m.)
Friday (10 a.m. to 4 p.m.)
Saturday (10 a.m. to 2 p.m.)
* According to the National Federation of Independent Businesses (NFIB)
This column is for general information purposes only and is not intended to provide legal, tax, accounting or financial advice.