Keeping track of your accounts, proper accounts reconciliation, and bank records is extremely important to filing tax returns. If you do not keep track of your expenses and payroll, you are setting up your business for an audit and bigger problems. 

As a small business owner, the difference between net and gross income can make a humongous difference. The total money you make after deducting production costs is your gross income, but if you deduct regular expenses from it, that is your net income. You need to keep track of these while filing your taxes.  

There are multiple categories of businesses, and all of them have different tax regulations. You need to register your company in the correct category like LLC, Sole Proprietor, Partnership, Corporation; there can be many options. You need expert advice from your legal attorney and accountant before you classify your business.  

A proper budgeting and forecasting plan can help a business map its future much better. You can understand how much you can put into employee pension funds, how much money you have in hand, how much bonus you can offer, etc. A good accountant is sure to help you with all of it and help you understand the scope of growth for your business in the immediate future. 

Do not keep document accumulation and tax filing work for the last date. The IRS’s late tax filing and late payment penalties are huge and will drain you of funds. The basic penalty is 5% of the unpaid taxes, and it adds up every month, starting from the last tax due date. This percentage can go up to 25%, depending on how late you are in filing it.  

No matter what the size of your business, it is never enough to keep track of your business transactions on excel sheets. They can be jumbled up and extremely confusing. You need a proper ERP software integration for your business to automate your daily functioning and tracking of finances. These systems are auto-updated, and reporting and documentation are done with ease and will leave you enough time to focus on other important matters.  

When the IRS comes down for an audit of your business and gets any hint of your personal transactions and business transactions overlapping, they will charge you. Even if you filed your taxes correctly, mixing accounts and credit cards will raise a lot of red flags with the government and get you under their radar.  

The IRS checks up on business on a quarterly basis to ensure payroll taxes are all filed on time. But managing payroll is a very detailed task. Hiring an external firm to manage the payroll for you can be a great start to making the process seamless. It will release all payments on time and also help keep up with all the tax filing rules and keep a clean track record for your business.