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Avoid This When Doing Your Taxes

Proper preparation for your business tax filings helps you avoid penalties for non-compliance and can lower your tax liability. Getting ahead of the game can save you time, money, and a lot of headaches. Whether you’re a seasoned entrepreneur or just starting out, understanding this process is crucial to managing your business effectively and meeting your legal obligations.

INCOME TAX is when you report your income, earned and unearned, to the federal and state governments. Income tax directly affects your bottom line. DEDUCTIONS are certain expenses that can be subtracted from your income before your tax is calculated, including office supplies, travel expenses, and insurance. CREDITS are amounts that can be directly subtracted from the income tax you owe, and are typically awarded for specific activities like investing in renewable energy.

It’s essential to understand the tax year, which for most companies aligns with the calendar year. Key deadlines throughout the year include quarterly estimated tax payments, and the annual tax filing deadline (April 15th). Failing to make these filings can result in penalties and interested charges.

How do you prepare for tax filings?

  1. Keeping meticulous financial records ensure your ready for tax season, financial reviews, and audits. Consistently categories receipts, invoices, payroll records, and bank statements.
  2. Make sure you use a separate bank account for your business. Mixing personal and business finance can cause complications with filing taxes.
  3. Incorporate a robust accounting systems to simplify managing business transactions. This automates recordkeeping, minimizes errors, and provides real-time insights.
  4. Every business operates under a specific legal structure, and it’s crucial to understand yours as it affects your tax responsbilities. Sole Proprietorships are the simplest form of business structure and means there is no legal distinction between the owner and the business. Partnerships involve two or more people, and in this case income taxes, deductions, and credits are passed through to partners and reported on personal tax returns. Corporations are more complex and are considered separate legal entities from their owners, providing the benefit of limited liability – there are two types, S-Corps and C-Corps. LLCs (limited liability company) are flexible business entities that combines elements of corporation and partnership structures – this is appealing to small and medium-sized business owners looking for simplicity along with limited liability.
  5. Understand your tax bracket and work with a professional to perform scenario analyses to determine the best strategy.
  6. Effectively manage your tax obligations. Accurately estimating your taxes can seem daunting, but there are tools to simplify the process, such as accounting software platforms, IRS resources and worksheets, and tax professionals, who draw on extensive knowledge to provide precise estimates and strategic advice.

Knowing how to estimate tax is crucial, but equally important is knowing how to reduce your tax liability. Popular deductions for small business owners include home office deductions (rent, mortgage, utilities, and maintenance), travel (flights, hotels, rentals, and meals) and equipment deductions (computers and machinery). Keep detailed records to prove these expenses are business related.

Tax credits directly reduce tax bill dollar for dollar, unlike deductions reducing taxable income. A notable credit is the small business healthcare tax credit, designed for small businesses that provide healthcare benefits to their employees. Another is the research and development tax credit, aimed at business involved in developing new products, processes, and software, rewarding investment in innovation. A third is the energy efficient commercial buildings tax deduction, relevant to those who make energy efficient improvements to their business facilities.

The only way to take advantage of these tax strategies is to start tax preparation early and possibly engage with a professional who can ensure your filing is accurate and maximizes your benefits. If you are feeling unsure about any part of the process, professional help from specialists with Demar Consulting Group is a resource for you.

At DeMar Consulting Group (DCG), we specialize in providing top-notch financial services tailored to meet the unique needs of small or large businesses. Our mission is to be your trusted partner on the path to financial success, offering comprehensive solutions that allow you to focus on growing your business while we handle the rest. Visit our Youtube channel or explore our website to learn more.

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Most Popular Questions

We understand that you may have questions regarding our services, practices, and policies. With that in mind, we have compiled a list of frequently asked questions (FAQs) to provide you with more information about our company.

DeMar Consulting Group provides a comprehensive range of services including audit, tax, management consulting, data analytics, business intelligence, financial modeling, accounting, and more.

Our services are best suited for not only the enterprise sized business, but also startups who are seeking expert guidance in managing their financial operations and strategic planning.

At DCG, we prioritize forging lifelong client relationships over transactional engagements, offering unlimited access to our collective expertise without traditional fee barriers, and fostering a transparent, integrated approach that emphasizes proactive guidance, ethical commitment, and educational empowerment to ensure our clients' enduring success. We are not just advisors; we're steadfast partners dedicated to redefining the very essence of consulting, ensuring every client feels valued, understood, and empowered for the journey ahead.

DCG is proud to collaborate with nonprofit organizations, providing tailored consulting services that address their unique challenges and advancing their missions. Our dedicated team understands the nuances of the nonprofit sector and is committed to fostering their growth, impact, and sustainability in the communities they serve.

At DCG, our experienced team is well-versed in navigating the complexities of audits, providing our clients with comprehensive support, insights, and strategic guidance throughout the audit process. We not only ensure compliance but also aim to make the experience seamless and stress-free, reinforcing our commitment to being reliable partners in every aspect of our clients' financial journey.

DCG has a transparent and structured pricing approach tailored to the specific needs of our clients. For our Office of Finance as a Service, we charge 2% of the client's monthly revenue. When it comes to audits and tax services, we initiate a scoping call to understand the intricacies of the project, allowing us to provide a custom quote that reflects the complexity and requirements of the task at hand. This ensures our clients receive value-driven, precise, and equitable pricing for every engagement.

DCG provides comprehensive tax planning and filing services, leveraging a deep understanding of the latest tax laws to optimize businesses' tax positions. Through proactive strategies and meticulous analysis, we ensure timely, accurate filings while identifying savings and credit opportunities. Our approach prioritizes both compliance and empowerment, ensuring businesses are informed and well-prepared for the tax season and beyond.

Absolutely. We can assist with financial forecasting, budget planning, and strategic financial decision-making to facilitate business growth. Our holistic approach ensures businesses not only achieve their growth objectives but also maintain long-term success and resilience in the marketplace.

We offer both ongoing and one-off services depending on your needs. We can discuss the best approach for your business during our initial consultation.
Getting started is easy! Just book a meeting using the link at the top of the page. We're looking forward to helping your business thrive.
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