by Lisa Henken, Chief Customer Officer at Netspend
Tax time is stressful for everyone. But for small business owners who are looking through receipts, trying to determine which expenses were business-related and which were not, ensuring they are recording the correct income for their business, trying to find the right forms and so much more, it can be even more stressful and overwhelming.
As your business grows, it is crucial to take the necessary steps to ensure you’re prepared for tax time, which will ultimately save your business time and money. There are a few tips small business owners can follow to effectively and efficiently separate their personal and business expenses, easing some of that tax-time stress.
Find the right bank (or non-bank) account for you and your business.
No matter the size of your business, you shouldn’t run expenses or payments through a personal account. From prepaid cards to traditional corporate bank accounts, there are many options out there designed to meet your company’s unique needs. Seek out an account that fits both the size and complexity of your business.
According to a recent survey by TD Bank, 27 percent of small business owners use the same checking account for business and personal expenses. But combining these expenses in a joined account can cause unnecessary frustration and a myriad of problems during tax time, including making it more complicated and time consuming when doing your taxes yourself or utilizing a tax preparation software.
Find a solution that allows for employee sub-accounts.
You can’t run your business and make every store run and purchase at the same time. At some point, your employees will need to buy gas or food, or make daily purchases for your business. When deciding on the type of bank or alternative account that’s best for your business, consider a solution that allows you to have sub-accounts for employees. With the right product, your employees can use their own company card and you will be able to determine how much money is available for their use. Also, consider a card that allows you to limit the type of stores at which employees are allowed to make purchases. With the ability to monitor and restrict where your employees make purchases, you decrease the risk of misuse of your company’s funds.
Lastly and most importantly, find a product that provides easy-to-use features and tracks daily purchases. Seeing your daily transactions and balances will allow you to make more prudent spending decisions and better plan for the future. Having a clear record of all of your expenses will give you the confidence that you’re providing accurate information on all of your tax forms.
Seek out convenient digital features.
No matter how you prepare your tax return, it will be a lot easier if you can provide your business transaction history to show your business expenses. Find a business bank or alternative account that allows you to easily download your transaction history so you can effortlessly send it to a licensed CPA or upload it into a tax preparation software.
Seek professional guidance, if needed.
Every dollar counts as you look for ways to expand your company, so consider contacting a licensed CPA to help prepare or review your return to ensure everything has been filled out properly. Professionals can also help you explore potential tax credits or write-offs that you may not know about or have overlooked.
Be wary of tax fraud.
Beware of fraudsters who are looking for ways to steal your personal or company information. Be protective of all data, information and documents, and never give out information over the phone or via email to someone claiming to be from the IRS.
Keep copies and records to benchmark future business growth.
Seeing how your company is performing each year will allow you to make more informed choices as you budget and plan for the future. Additionally, providing transparent and accurate information to potential investors could enhance your chances of securing funding, if that’s on your radar. As such, be sure to keep records of all your expenses, tax refunds and returns for future reference and use.
Every minute and dollar matters for your business, and tax time can sometimes be a burden on both. But it does not have to be overwhelming, time and money-intensive, or stressful. By taking proactive measures, being diligent about keeping personal and business expenses separate and utilizing useful tools and tips, small business owners can decrease the time, money and amount of stress that is associated with filing taxes to get that much-needed (and deserved) tax return.
*Please use your discretion before making any decisions based on the information provided. This article is not intended to be a substitute for seeking professional tax advice based on your individual needs.
Lisa Henken is the Chief Customer Officer at Netspend. She’s been with the company, since 2006. Prior to joining Netspend, Lisa worked as a business consultant for a major global consultancy. In her role at Netspend, Lisa is the internal customer advocate. On the phone, online, and on customers’ mobile devices, Lisa’s team works to identify cardholder issues. She drives changes that improve the cardholder experience and works to make sure that real prepaid customers have a voice to regulatory and consumer advocate groups.