Business Tips

tax tips

The business owner’s guide to staying ahead during tax season

Tax season is officially upon us, and for most business owners in the construction and field service industries, this means one of the most stressful times of the year. With good reason. From estimating total costs to wracking your brain for all your write-offs, there are a lot of things about tax season that can drain your time and attention.

No matter how hectic it can become though, there are a handful of quick and simple steps you can take to stay ahead during tax season and make it a breeze. Here are 4 of them.

Know your write offs

One of the simplest ways to save big this tax season is to know exactly what you can and can’t write off as a business expense. But before diving in headfirst, there are a few things to keep in mind.

To get started, use a tool like MileIQ to automatically track your miles driven, and easily mark them as business-related or not.

Your business miles are one of the most basic expenses you can write off on your taxes. And with 54.5 cents that can be written off for every business mile you drive, your total savings can pack a punch. To get started, use a tool like MileIQ to automatically track your miles driven, and easily mark them as business-related or not.

Other common construction assets you can write off include car and truck expenses, money used to market and advertise your business, salaries of subcontractors or employees, and small tools that are expected to last a year or less—which usually include hard hats, boots, tool belts and similar items.

Before you start writing everything off, though, one important thing to determine is whether or not you plan on filing your taxes on a cash-basis or an accrual-basis. The reason being, almost all year-end tax strategies you read online surrounding business write-offs only apply to cash-only taxpayers.

For instance, one common strategy is for business owners to make large purchases near tax time or to write off future purchases for the coming year. Yet, if you’re filing for 2018 as an accrual-basis taxpayer, you aren’t able to write off an upcoming equipment purchase for 2019 like you would if you were filing on a cash basis.

Go paperless wherever possible

By ditching your filing cabinet and embracing new technology, you’ll save yourself time and a lot of headaches throughout the 2019 tax season.

Not only will making the switch to paperless filing save you from a potential lost receipt or important document, but it’ll also make tax season much less time consuming than it’d be otherwise.

To start, try using tools like Shoeboxed to scan and migrate all receipts to your accounting software. You should also download your credit card statements, and make electronic copies of bills from vendors. This will ensure you have a digital paper trail to streamline the entire tax filing process.

By ditching your filing cabinet and embracing new technology, you’ll save yourself time and a lot of headaches throughout the 2019 tax season.

File early

According to CNBC, around 25 percent of Americans wait until the final 14 days to file their taxes. In 2016, another 13 million filed for tax extensions.

If you file late, you and your CPA may feel rushed, increasing the chances of errors or flubs that could cost your company big time. There’s also a chance you may have to pay Uncle Sam more than you expected, which is why giving yourself enough time to prepare for a potential financial hit can help immensely.

Going forward, begin filing in December or early January. Also be sure to stay updated on your quarterly estimates by setting aside money for your “Uncle Sam savings account”.

Be up-to-speed on payroll

With payroll typically accounting for 50 percent of the total budget for mid-size construction businesses, staying up-to-date with your electronic payroll records is one of the simplest ways you can make this tax season a smooth one.

On that note, if you’d like even more savings in the coming year for your business, ExakTime can help save you thousands each pay period on payroll by ensuring you only pay for hours your employees actually worked with our award-winning time tracking and workforce management solution.

ExakTime also seamlessly integrates with over 90 payroll platforms, giving you flexibility without disrupting your processes already in place.

No matter how long your construction company has been around, tax season will always be a drag—and with your time already being limited as a business owner or manager, filing taxes will be time that’d be better spent elsewhere. By staying ahead of the curve during tax time, starting with the tips laid out in this article, you’ll make the process a lot less frantic.