Every business owner dreads tax time when they have to write a check to the government. These small business tax tips could help you save hundreds.

More than 30 percent of business owners think they’re overpaying on their taxes each year. And if you’re like most small business owners, you probably are.

That’s because the tax code is incredibly complicated and changes from year to year.

Though you can’t escape having to file and pay your bill, there are ways to lower your costs and get the most out of your tax return. You just need to know where to start.

Here are a few simple small business tax tips to help you save money, time, and stress when filing your taxes.

1. File Quarterly Taxes on Time

When you own your own business, you’re in charge of withholding taxes from your paychecks and sending estimated tax payments in every quarter. When you miss a payment or send payments in late, the IRS can fine you when you file taxes in April.

The easiest way to avoid that penalty is to send payments in on time throughout the year. Put the quarterly tax dates on your calendar, set up reminders on your phone or email, or ask your accountant to remind you a few weeks before payments are due.

And always make sure to set money aside to cover those payments. The last thing anyone wants is to have to take money out of the budget to cover taxes.

2. Separate Business from Personal Expenses

This may seem like common knowledge, but a lot of business owners, especially sole proprietors fail to separate their personal and business expenses. And when this happens, figuring out which purchases are tax-deductible and which were personal is almost impossible.

Set up a separate business checking account and credit card and use them only for business expenses. You’ll be better prepared to claim deductions at the end of the year.

Remember, the more deductions you can claim, the less you’ll owe the IRS!

3. Keep Track of Your Receipts

If you’re deducting business expenses like office supply purchases, utility bills, and other similar costs, you’ll need to keep your receipts and statements. These allow you to prove to the IRS that the expenses were business-related and not personal.

Anytime you make a purchase for your business, keep track of the receipt. Put them in a filing cabinet or scan them onto the computer and keep a digital copy.

You don’t have to send in the physical receipts when you file taxes. But by keeping them on hand, you’ll be better able to settle any audits or disputes with the IRS.

4. Pay Into Your Retirement Savings

You put everything you have into your business. But that doesn’t mean you should neglect your retirement savings. In fact, doing so can cost you on your taxes!

Paying into your retirement accounts allows you to lower the total taxable income you brought home during the year. The lower your taxable income is, the lower your tax bill will be.

Most business owners can contribute a maximum of $5,500 each year. But if you’re 50 and older, you can contribute up to $6,500.

This won’t eliminate your taxes, but it can help you save money. And as an added bonus, you’ll grow your retirement savings in the process.

5. Make Sure to Classify Employees Correctly

When you hire workers, you have the choice of making them an employee or hiring them on a contract basis. With employees, you’re responsible for paying a payroll tax. With contract workers, you’re not.

But that doesn’t mean you can hire your entire team as contract staff indefinitely. You need to know the difference.

If your workers operate as their own business and provide services to you while working on other projects for other clients, they’re an independent contractor. But if they work for you as an employee, you have them on the payroll and provide them with benefits, classify them as an employee.

Mixing the two up, either intentionally or by accident, can get you in trouble with the IRS.

6. Deduct Travel Expenses

If your business requires you to travel, even occasionally, you’re in luck! You can deduct those business-related travel expenses from your taxes. This includes airfare, gas, car rental fees, and even hotel stays. You just need to hold onto the receipts for each purchase.

As long as the trip was business-related, the expenses qualify. Keep in mind that any personal forms of entertainment or purchases not related to business, while you’re on the trip, can’t get deducted.

What About Food Expenses?

If you’re taking your clients out to dinner, you may be able to deduct the cost of the meal as a related business expense. Hold onto the receipts (make sure it’s itemized) and talk to your accountant.

7. Work with a Professional

Tax software makes it easy to keep track of your finances, but it’s no substitute for working with an experienced accountant. In fact, it can end up costing you.

Software does one thing very well: streamlining data entry. You don’t have to manually fill out forms and run calculations. It does it for you.

But it can’t tell you which deductions you qualify for or inform you about some you’ve missed over the last few years. Only an experienced accountant can do that.

They know the tax code and how each change impacts your business and your tax liability. Even better, they take the stress out of preparing and filing your returns. Instead of working on your taxes for hours on end, you’ll be able to get back to running your business.

Follow These Small Business Tax Tips

Saving money on taxes is something everyone wants to do. But it’s not always as easy as you think. These small business tax tips will help you prepare for tax season and save you money in the process.

Worried about filing everything accurately? Contact us today to schedule a consultation. We’ll make sure you’re getting the most from your return year after year.