While April 15 may still feel like a long time from now, it's important to keep your business on track for the tax season deadline, writes Nerdwallet's Spencer Tierney.
Mr. Tierney's advice is five-pronged:
1. Try bookkeeping online
"If you find paper receipts cluttering your workspace, consider storing them online using nifty apps like Shoeboxed and Neat."
2. Separate personal and business deductions
"For small business owners especially, make sure that your personal and business expenses stay separate. As you follow the Section 179 guidelines and divide up costs, check your personal bank accounts for any business expenses or employee reimbursements."
3. Apply for an EIN
"This is an Employer Identification Number, a nine-digit number given by the IRS so your business can be identified consistently on taxes from you and your employees."
4. Keep taxes for your employees and contractors straight
"Distinguishing your employees from your independent contractors is crucial. Simply put, an employee's work can be monitored for what and how things are done, whereas a contractor's work can be controlled only when it's complete. For taxes, this freedom of action makes the contractor a self-employed worker who files a Schedule SE (Form 1090), or the self-employment tax."
5. Know the important dates
"If you miss the deadline, the IRS imposes a penalty fee of 5 percent monthly for late filing, up to a maximum of 25 percent. The total penalty is calculated from your deadline to the date you filed the tax return, so it's in your best interest to file your taxes."
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