Running An Online Business? Here Are 6 Tax Tips For The Young Entrepreneurs

Small businesses are the forerunners of the economy today. Those days are long gone when monopolies ruled the market. The number of people showing enthusiasm in owning and managing a small business has suddenly seen a rising curve. And more so, one of the toughest competitors in the race to embrace entrepreneurship are online businesses.

While the older generation has had a great time shopping in the brick and mortar stores, the younger generation seems to have chosen comfort over everything, including shopping. From ordering food online to the mobile apps for booking a cab, everything that the millennials have is helping them save both their time as well as efforts. Online businesses are, thus, becoming lucrative by the day and are a great outlet for those brewing with innovation.

But, How Do Entrepreneurs Running An Online Business Do Their Taxes?

Paying taxes is a picnic for none. In fact, most online business owners agree that the toughest part about coordinating their business is preparing the taxes. It requires consistency and a continuous knowledge about the tax laws to be able to prepare a return in time and without errors. Entrepreneurs often have to seek professional help when it comes to accounting and taxes, and those who don’t, usually end up paying more taxes than they were supposed to. The best thing to do is to invest in a smart tax preparation suite, such as, Drake tax software hosting to avoid spending sleepless nights during the tax season.

Apart from hiring a tax professional and using the tax preparation software, here are five tips exclusively for entrepreneurs who are running an online business:

• Make Tax Planning A Habit

It is not only your business that needs to be planned. Tax planning is equally important. For any successful business, goals need to be set. And to achieve those objectives, an organization is imperative. Likewise, it is necessary that entrepreneurs who administer an online business invest their time in good tax planning as well.

Expenses should be tracked, receipts need to be collected for later reference, and savings need to be managed, so as to avoid paying any extra taxes.

• Use A Professional Tax Software

When it comes to tax planning, anything that allows good organization needs to be welcomed. A professional tax suite can help take a lot of stress away from online business owners. Tax preparation is one less of trouble with tax software. And to add the cherry on the cake, the software can also be hosted on the cloud. For those already streaming their businesses online, a hosted tax software such as Drake cloud can be a real blessing. You can access all your business files on a single platform, on any device of your choice, and from any location, only if you have a working internet connection.

• Keep Your Inventory Stocked-Up And Supplies Flowing

Since your goal is to pay fewer taxes, you can reduce your taxable profits by stocking up on inventory and replenishing your office supplies. Non-perishable stocks can be easily stored for more than a year and if your inventory is already running out, it won’t hurt to stock up a little. Take a quick look at your office and make a list of things you may need, such as ink and paper for your copy machine, pens, and paper clips etc.

• If Pre-paying Is Possible, So Be It

Pre-paying can help serve two purposes. One, it reduces the amount of taxes you pay. And two, you are giving yourself a cost-benefit in the future. Inflation is real and constant. You can pre-pay your business insurance, the rent of your business property (if any), and other payments such as certain subscriptions to save up on taxes. Simply use your credit card to make the payments and get your business some real benefits.

• Include Uncollected Debts And Unforeseen Expenses To Lower Your Profits

Bad debts are as real as a lost income. And, your office hardware needs regular upkeep to prevent unwanted breakdowns. Bad debts can be classified as lost income and repair and maintenance costs can also qualify to help you with reducing taxes. If one of your clients runs away with your money or fails to pay, you have every right to mention it in your tax return. Hire a professional to look into your bad debts and take advice before you write them in your tax return.

• Last, But Not The Least, Seek Professional Help

If you are new into your online business or have never done your taxes on your own before, it is obvious you need to seek professional advice. Most business owners who file their taxes without help agree to have left money on the table. And not just for taxes, every business needs an accountant right from the planning stage. CPAs and accounting professionals have in-depth knowledge about laws that can work in your favour, and when it comes to taxes, it is best to hire a professional tax preparer.

In Conclusion

A tax professional and a smart tax preparation software hosted on the cloud is a combination enough to keep your tax worries sorted. Keep the above-mentioned tax tips in mind all year round and enjoy a worry-free tax season 2019 and beyond.