How To Avoid the Pitfalls of Taxes

I will be the first to admit that I'm not an expert on taxes. If you need expert tax help, then I would recommend you talk to a service that deals with taxes all the time.

However, there are some easy things that you can do to avoid making tax time a nightmare and maybe even save yourself some money.

1. Keep accurate records. How can you know how much money you have made from your business if you don't enter your income and expenses in your accounting program on a regular basis?

At a minimum, you should be updating your business records monthly and closing your books at the end of the month. Weekly updates are even better, and if you have a lot of transactions, you should do them daily.

You also want to make sure that you have receipts for everything, and that you file your records regularly.

2. As soon as you can afford it, start a retirement plan. Although the numbers vary from year to year on how much of your retirement money you can deduct on your taxes, you want to start saving for retirement as soon as possible. Not only will you get a tax break, but when you are ready to retire, you will have a nice nest egg.

3. Pay your taxes quarterly. If you don't pay at least some of your taxes throughout the year, you could get to the end of the year and have a substantial tax bill that you can't pay.

If you don't pay a certain percentage of your taxes before the end of the year, you could also end up with a substantial tax penalty.

4. You are only required to pay taxes on the money that you have made AFTER you have deducted your expenses. That's why it is vitally important that you keep good records of your expenses. Deduct everything you legally can. Otherwise, you could end up paying more taxes than you really owe.

If you want more information on taxes, or you want to do your own taxes at the end of the year, then I recommend that you get the Small Business Tax Guide from the IRS site. This way, you'll know what deductions you can take and plan your business accordingly. You'll find more information on this free resource here: http://www.irs.gov.