Tax season causes a whirlwind of emotions for small business owners.
On the one hand, they’re overwhelmed with the pressure of tracking and collecting every financial transaction, and on the other, they’re trying to make sense of every tax liability.
Knowing how strict the IRS is with tax filing, many businesses end up outsourcing their tax filing.
This decision helps them leverage the knowledge of tax specialists and continue focusing on their core business activities.
But in this chaos, how can you ensure the service you outsource your business tax filing to is also affordable?
Let me help you with that.
Key Takeaways
- 71% of businesses hire a professional tax service to help them with tax preparation.
- More than half of Americans find federal income tax returns complex.
- Professional services can help you stay organized during the tax season, making the business tax filing process more efficient and quick.
- Hire a tax professional who understands your industry standards.
Business tax and its types – A quick overview
Tax preparation can be exhausting, especially for individuals without prior knowledge or understanding of the latest tax regulations and accounting principles.
About 71% of small businesses outsource their tax preparation.
This is a crucial decision as a tax specialist takes the burden off your shoulders and handles your financial data to file your tax returns.
They have the necessary information for leveraging tax deductions which helps you with cost savings.
But before we understand the role of tax service providers, let’s help you understand the different types of business tax.
Income tax
The income tax returns are filed as you go. Employees may notice that the tax is already cut when they receive their monthly paychecks.
It is the tax applicable to the income you earn throughout the year.
Estimated tax
If you don’t pay income taxes, you opt for the next best option – estimated tax.
Estimated tax is the annual tax indicating your income during this specific period.
Self-employment tax
Now self-employed business owners may need clarification about their tax liability.
But there’s no need.
Self-employed individuals pay the self-employment tax which covers your social security and medicare tax.
This payment essentially goes into the expense of the social security system through which you receive retirement and disability benefits along with medical insurance.
Employment tax
As a business owner, you must have employees working under you. This comes with responsibilities, like paying and filing forms on their behalf.
The employment taxes are as follows:
- Federal income tax
- Federal unemployment tax
- Social Security and Medicare taxes
Excise tax
Excise taxes are applicable in the following situations.
- If you work in the manufacturing industry or sell similar products
- If you run a business
- If you use diverse forms of equipment or technical facilities
- If you provide any payable service to businesses or individuals.
Here is the list of forms that you should get yourself familiar with, should you have excise tax liabilities:
4 tips for managing business tax
53% of Americans are bothered by the complexity of federal income tax returns.
This is true for filing all types of business taxes.
Tax planning and preparation are the best things you can do to simplify the process.
Here are 4 ways to ensure that.
- Track and record your income and expenses to optimize tax deductions at the time of calculation.
- Collaborate with a tax specialist or accountant to help you plan and prepare for tax season.
- Use professional help to list down the tax deductions valid for you, so that you can save as much of your income as possible.
- Make sure you file your tax return correctly and on time.
DIY taxes vs outsourcing business tax filing
While you may be in favor of doing your own taxes to save as much money as possible, a professional service can help you save more.
Firstly, filing for tax returns is time-consuming and mentally exhausting.
You can do your own taxes but you spend most of your time calculating and tracking your day-to-day transactions.
This will leave you with less time to focus on your core business functions which will ultimately reflect on the numbers.
Outsourcing your business tax filing may seem like a good option on short notice, but if you look at its broader picture, you’ll see its many advantages.
5 benefits of outsourcing business tax filing
Let’s explore the top benefits of outsourcing business tax returns.
1. You can save money
If we’re being honest, the first thought that comes to mind when planning to outsource business tax filing is this: here comes yet another cost.
But that’s far from the truth.
By outsourcing your business tax filing, you actually get a professional tax specialist who helps you take advantage of all the tax deductions and credits.
This dedicated team has the knowledge and expertise necessary to guide you through tax preparation.
They can easily identify opportunities to save money – something you may not be familiar with.
This can be a great advantage, especially when you save your hard-earned money.
2. You stay organized
The tax season comes with a lot of pressure, but planning and preparing ahead of time can really take that burden off your shoulders.
If you run a small business, getting support from a tax return service can really switch gears for you.
A professional service comes with tools that automate record-keeping and tracking day-to-day expenses.
What this does is, it takes away the need to spend hours of your day on regular bookkeeping.
Another thing it helps with is accurate and timely tax returns.
You not only save money by meeting the deadlines but also stay compliant with the law.
Hiring a service provider to handle your tax returns helps you get control over your business.
You continue focusing on your core business activities, knowing someone reliable is taking care of your tax returns.
This organized approach can actually become your strategic advantage.
3. You leverage tax liability
Maintain control over your finances by outsourcing your tax preparation and tax filing to a reliable service provider.
You can maximize your savings by making the most of your tax deductions.
What’s more important to understand here is that a professional tax service provider can help you figure out what is required in the current business environment.
See, the policies for tax filing change almost every other year, at least every time the government changes.
You need to have your facts straight.
And a professional tax advisor would do that for you.
They can create personalized plans, offering solutions that meet your specific business needs.
They handle business tax filing from start to finish without negatively impacting your company’s bottom line.
4. You keep the process quick and simple
Tax filing doesn’t have to be as exhausting and frustrating as it is made out to be.
In fact, through proper planning and preparation, you can make the process more efficient and stress-free.
Get a professional tax advisor on board to save your time and energy. It will give you the space and time to take a backseat and let them handle your tax filing.
A tax service provider has the knowledge and tools to automate the process.
They can reduce paperwork by tracking your income and expenses daily.
A step that would take hours from your day would take them minutes, speeding up the process and adding efficiency.
5. You have expert support throughout the year
Tax preparation becomes too simple and easy when you track business finances throughout the year.
A professional tax support service basically does that for you.
They maintain compliance throughout the year, not just during the tax season.
This way, your finances are updated on time and with accuracy.
Whether you are looking for tax preparation, audit support, or help with payroll processing, this professional service helps at every stage.
2 affordable options for business tax filing
There are a few things that you need to consider before hiring a professional tax filing service to keep your costs as low as possible.
1. Find a service equipped with advanced tools
There are various tools and advanced systems available to help you automate tax preparation and filing.
Accounting software can help you track and make sense of your daily financial transactions.
Make sure you hire a service with access to the latest technology to make this process simpler and more efficient.
2. Choose a service with experience in your industry
It is important to hire a service that understands the laws and policies specific to your industry.
For example, if you have a retail business, get help from a service with industry-specific knowledge.
You can ensure this by asking them questions about their experience.
The key is to ask questions that can give you clarity on their role in your business tax filing.
The Bottom Line
Business tax filing is an essential part of your business that can be simplified by hiring a professional service.
Outsourcing business tax filing to get support from the best in the field, leveraging their knowledge and experience to save cost and time.
It is extremely important to know how well-equipped a tax service is before getting them on board. So do ask them questions and get to know their experience first.
Ledger Labs has been helping businesses across industries for more than a decade now.
We have the talent and resources to help you with business tax filing, so you can save every bit of your money to improve that bottom line.
Book an appointment with us today to get started.
