As the mid-year approaches, now is an ideal time to assess your business results to date and plot out your tax actions for the months to come.
Keep good records
Boring as this advice may sound, you shouldn’t ignore it. Good records enable you to claim all the deductions and tax credits to which you are entitled. Use technology to simplify the record-keeping required to substantiate your business write-offs.
Make estimated tax payments if necessary
As a business owner, you likely pay tax on your share of business profits on your personal income tax return (only owners of C corporations do not automatically do so). However, if you’re self-employed, you have no wages from which to withhold income tax to cover your tax liability with respect to the profits. You must make quarterly estimated tax payments (federal income taxes and, where applicable, state income taxes) on what you expect to reap from your business.
If you are an S corporation, you can adjust your wage withholding on the salary you receive to cover the tax burden with respect to your share of corporate profits.
Schedule an appointment with your tax advisor
If summer is your slow time, then now is a great time to meet with your tax advisor. Go over your current tax strategies and set goals for the remainder of the year. These goals should reflect actions, such as buying new equipment or setting up a qualified retirement plan, if your business can benefit.
While the bulk of your time and attention is devoted to bringing in revenue for your business, be sure to allot some time on a regular basis for tax planning. It’s not what you earn, but what you keep after tax, that counts!