Accounting

Smart Tax Season Planning for Small Business Owners

John Kampfe, Tax Shareholder

January 11, 2018

Smart Tax Season Planning for Small Business Owners

What should small business owners be focused on during tax season? While you started 2017 with the best of intentions to keep your financial records organized, you may find yourself scrambling to find receipts and other documentation to prepare your tax returns. All too often it is accounts receivable that presents that greatest challenge. More than 70 percent of small businesses outsource their tax preparation, according to the 2015 Small Business Accounting Report. Still, that doesn’t mean there isn’t work to be done in advance. Here are five tips to help small business owners prepare for tax season.

Carefully track all of your business expenses

This might sound like a no-brainer, but everyone gets busy and despite good intentions, recordkeeping can lag. Enter your expenses into your accounting system as you go. This includes everything from entertainment and mileage to business trips and meals. It’s also a good practice to include detailed notation so you can back up all of your expenses with documentation should you be audited.

Utilize accounting software

Has your business missed deadlines and even faced penalties because you lack the time for proper reporting? Effective accounting software will help you track your accounts, expenses and payroll. According to the Small Business Accounting Report, QuickBooks remains the most popular software; but there are many other effective software programs as well. CPAs can assist small business owners in selecting the appropriate accounting and recordkeeping systems that best fit their needs.

Fund a Qualified Retirement Plan

If you are fortunate enough to have extra money in the bank, consider creating and funding a qualified retirement plan for you and your employees. If you only have a few or no employees, a Simplified Employee Pension (SEP) plan is the way to go. With a SEP, you make 100% of the contributions. If you have more employees, a 401(k) plan is the way to go. By the way, costs associated with creating the fund are typically tax-deductible.

Take advantage of tax incentive programs

Has your business introduced or improved a new product or process? If so, it may qualify for valuable research and development (R&D) tax credits. Businesses with less than $5 million in annual revenue can take the tax credit up to $250,000 against their payroll taxes, assuming they have employees engaged in R&D for five years. Be sure to check your state’s tax incentive programs.

Work with a qualified CPA

Using a software program is a great start to getting your records in order. A CPA with expertise in working with small business clients can help ensure you are taking advantage of every tax incentive and deduction, as well as keeping you in compliance with the latest rules and regulations. You will also have the added assurance of knowing your taxes are prepared accurately and on time, and that you will avoid penalties. Keeping in contact with your CPA throughout the year will help ensure a smoother and more accurate income tax return process. And when your CPA is involved in your business throughout the year, she/he is better able to identify and implement income tax reduction strategies. You don’t want to pay more in taxes than you must, so plan ahead—don’t wait until tax time. For even the most careful business owner, tax season can be a nightmare. If you follow these tips, it doesn’t have to be.

Competition, Achiever, Deliberative, Analytical, Focus

John Kampfe

Tax Shareholder

John Kampfe, Tax Shareholder, began his career in 2013. Since joining Lutz, he has established himself as a key advisor in tax compliance and consulting, particularly known for his work in tax structuring and due diligence.

Specializing in the construction and real estate industries, John takes a deliberate, analytical approach to each client's unique situation. He values finding the best solution for every challenge, taking time to understand the full context before developing actionable strategies. John's competitive drive pushes him to achieve optimal results while making complex scenarios clear and manageable for his clients.

At Lutz, John exemplifies the firm's commitment to being an expert through his focused, thorough approach to problem-solving. His ability to forge strong relationships built on trust and transparency, combined with his solutions-oriented mindset, helps clients capitalize on opportunities in an ever-evolving tax landscape.

John lives in Omaha, NE, with his wife Kristen and their children, Claire and Owen. Outside the office, he enjoys attending sporting events, outdoor activities, hunting, and fishing.

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About

Smart Tax Season Planning for Small Business Owners

Carefully track all of your business expenses

Utilize accounting software

Fund a Qualified Retirement Plan

Take advantage of tax incentive programs

Work with a qualified CPA

John Kampfe

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