Important Tax Accounting Tips for Small Businesses

Important Tax Accounting Tips for Small Businesses

Managing a business, even without considering the tax considerations required to file tax returns, is a difficult and complex task.

Important Tax Accounting Tips for Small Businesses.

According to experts in the field of taxation and management, the cooperation of company managers with their accountants and consultants should not be limited to the time when the deadline for preparing tax returns; Rather, it is better for this cooperation to continue throughout the year.

Ignoring this advice and making financial decisions without seeking the opinion of an accountant or financial advisor increases the likelihood of a business losing money in the long run.

In this article, we will talk more about the benefits of consulting with such people and introduce you to the important points of tax accounting that small businesses’ attention to them will make them more profitable and successful. be with us.

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9 important points in tax accounting.

1. Pay attention to the skills required of a tax accountant for small businesses.

The Company Accountant’s duties are not limited to providing financial statements or tax returns. If he is not able to go beyond these tasks based on his knowledge and experience, it is not a good choice for small businesses.

 

Tracking the company’s revenues and expenses, ensuring that there are no problems with financial flows, and monitoring net and gross profits [gross profit is the total revenue of the company, and net profit refers to the residual income, after deducting various expenses and expenses], Among the tasks and capabilities required for small business accountants.

Therefore, it is better not to limit the cooperation with the tax accountant to the time of preparing the tax returns and to communicate with him from the very first day of starting the business and use his advice.

Although this is one of the important points of tax accounting, many small businesses are unaware of its importance for the sustainability of their business and its success.

2. The importance of coordinating the information submitted to the tax administration about the revenue generated.

In addition to the report you receive from the company’s revenue, the IRS also receives another report: The second report is usually provided with a corporate audit. Another important point of tax accounting is the consistency and consistency of the information contained in these two reports.

Lack of this coordination damages the reputation of the company in the eyes of the officials of the Tax Affairs Organization. This can have unintended consequences for the business.

3. Maintain adequate financial records.

Maintaining adequate financial records throughout the year is another important point of tax accounting that ensures the accuracy of the tax statements provided. Insufficient financial records can be suspicious or, worse, expose your business to “audit risk”.

Investing in one of the most important accounting software for your business is a solution that experts believe will prevent such issues and problems from occurring.

Using this software is not difficult and complicated (they are user-friendly), they are cheap and they keep your information about the income and expenses of the business up to date.

4. Separation of personal financial accounts from working financial accounts.

Conflicting personal expenses with business expenses, no matter how accurate and credible your company’s expense statements are, is a problem that can cause trouble and even make it possible for relevant agencies to review your personal financial accounts.

It is advisable to have a separate financial account and credit card for your business and use it to pay all related expenses.

5. The importance of understanding the difference between net and gross income.

If the cost of producing the product is more than what you expect for the consumer, it is clear that you are losing money: no matter how much you sell. Small business owners are often unaware of the difference between net and gross income and do not take into account the difference that can have unintended consequences.

Consider a hypothetical business that costs 200,000 tomans to produce each product and sells each of these products at a total price of 250,000 tomans. The gross income of this business will be 50,000 Tomans for the sale of each product.

But after considering other common expenses (payment of wages or salaries, rent, etc.), the net income may reach 20 or 10 thousand tomans.

Therefore, knowing the difference between net and the gross income is one of the main and important pillars for achieving profitability and business success.

6. Accurate and correct identification of the type of commercial company.

Accurate and accurate identification of the type of business company is another important point of tax accounting. Ignoring this point may lead to overpayment of taxes. In addition, Depending on the type of business you are registering, different taxes will be levied on your business.

All in all, Some types of commercial companies are joint-stock companies (private or public), limited liability companies, joint-stock companies, joint-stock companies and non-joint stock companies, and cooperative companies. Seeking the advice of an experienced accountant or financial advisor when determining the type of business can be helpful.

 

7. Proper management of salaries paid to employees.

Whenever possible you should have all four of these components in place for launch to maximize profits. Sometimes small businesses turn to less reputable companies in order to save costs and put themselves at risk of depositing taxes on their employees’ salaries instead of paying taxes on them.

The disappearance of wage tax is one of the consequences of cooperating with such companies and puts small businesses at risk of inability to pay wage tax.

The IRS usually reviews this type of tax every 3 months (at the end or beginning of each new season).

8. Seek the opinion of an accountant or financial advisor about the work plan.

An experienced accountant or financial advisor can give you good suggestions on how to grow your business.

There are situations in which seeking the opinion of such a person will be helpful in advancing them better and more effectively; Suppose, at the time of determining the amount to be used for retirement savings, or when not receiving the additional benefit or bonus resulting from a particular business transaction at the present time, it is considered as receiving a larger amount this year.

Sometimes you may be hesitant about something like buying or renting a commercial property to start a company; An accountant or financial advisor can also help you in such cases and convince you, for example, that buying a commercial property will reduce your costs in the long run.

9. Maximize the rules and benefits of investing.

Sometimes buying a property, commercial land or special equipment will give you a significant discount. Familiarity with the accountant or financial advisor with such rules and benefits will play a significant role in reducing costs and maintaining capital for the business.

Conclusion

As you can see, most of the important points of tax accounting are related to consulting an experienced accountant or financial advisor. From coordinating documents and information registered in the company to maintaining financial records and even specifying work plans and scheduling, all of them are among the cases in which the use of knowledge and experience of such people will be effective and efficient.

Of course, as an employer, you also have a duty to keep your information up to date and, as far as possible, to be familiar with the rules and procedures of the tax authorities. Together, they ensure the success and sustainability of your business in the long run.

If you have a comment on the subject or other important point that comes to your mind, please let us know and the readers.

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