By Vicki M. Daughdrill
Small Business Resources LLC
Whew! Tax season 2015 is finally over. Tax returns filed, balances paid, refunds requested. Now let's rest until next year, right? Wrong. Now is the time to begin preparing for a successful 2016 tax season, including filing your taxes in a timely manner, taking all possible legal deductions and minimizing your tax liability.
The U. S. tax code is an extremely complex and detailed document with portions dating back to 1873, which resulted in the Revised Statutes of the United States, approved June 22, 1874, and effective as of Dec. 1, 1873. Title 35 of said statues pertained to internal revenue. Since 1873, Congress has revised, edited, changed and amended the code numerous times. In 1913, the code contained only 400 pages, while in 2013 the code contained 73,954 pages.
Given this complexity, what can you do to make the process of filing taxes easier? Here are a few steps you can take right now to help make the process flow more smoothly and to feel confident that you have done everything you can to maximize your deductions and minimize your liability.
Whether you prepared your tax return yourself or paid a professional tax preparer, it is important to know and thoroughly understand all of the components in your complete tax return. While the tax code is complicated, most small business returns are not overly convoluted and can easily be understood. If you hired a tax professional, schedule an appointment to go over your return in depth so that you have a thorough understanding of what you submitted to the IRS.
Ask questions. If you don't understand the answer, ask the question again. Understand what information was included in your income. Questions to ask include the following:
If you are a single business owner, using tax software such as TurboTax or Tax Act can help you prepare your taxes yourself. Also, there are free versions of tax software available online for those individuals who have minimal tax reporting. The purchased software products will walk you through each type of income to be sure you have not omitted anything and will list all of the types of expenses you can claim. The software is very user friendly.
Following are several actions you can take to keep your records orderly and accessible:
For many years, efforts have been ongoing in attempting to rewrite the tax code, streamlining it, lowering rates, reducing deductions and exemptions, and eliminating tax breaks for favored groups. To date, these efforts have been unsuccessful, and disputes about updating the code continue. Suggestions include changing the system to a flat tax, a value-added tax system and a national sales tax.
On Nov. 13, 1789, Benjamin Franklin wrote in a letter to Jean-Baptist Leroy, "Our new Constitution is now established, everything seems to promise it will be durable; but, in this world, nothing is certain except death and taxes." So, until the system changes, take every step possible to prepare for next year's taxes.
The IRS provides extensive information for small business owners on paying and filing income taxes at www.irs.gov/Filing/Self-Employed-&-Small-Businesses.
Topics listed on the website include:
Vicki M. Daughdrill is the Managing Member of Small Business Resources LLC, a management consulting company. E-mail her at firstname.lastname@example.org or call her at 601-310-3594.
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