In the Virgin Islands, small business owners explore the options for managing their tax implications. Small business owners who file as self-proprietors must pay into Medicare and Social Security. Without the right plan in place, the business owner won’t maximize their refund and could pay more than necessary. A local financial advisor helps the owners create a better tax plan.
Keep Accurate Records of Your Receipts
Small business owners need accurate records of all receipts. By scanning receipts into a database, the owner lowers a potential loss due to unreadable receipts at the end of the year. The receipts are also listed in their digital business expense records. The right software helps the owner keep track of the total value of their expenses.
Deduct All Business Expenses
When filing tax returns, the small business owner deducts all business-related expenses. The key to maximizing a refund is to lower their profits for the year. A financial advisor identifies all possible business expenses that the owner could use. Business dinners and entertainment for clients are often overlooked when deducting expenses. Any items or supplies used for the business are expenses that are tax-deductible.
Create a Savings Account for Projected Tax Payments
A more proactive way to manage projected tax payments is to create a savings account. The business owner starts with the percentage of taxes they paid the previous year. The projected expenses are deposited into the savings account at the end of each quarter if the owner pays at the end of the year.
What are the Benefits of Quarterly Payments?
Financial advisors show small business owners how to calculate quarterly tax payments. The business owner uses vouchers to submit the quarterly tax payments to the IRS. The benefit of paying quarterly is that the owner won’t face high costs at the end of the year. If they pay more than necessary, the overpayment is acquired through their tax refund.
In the Virgin Islands, small business owners calculate their annual tax implications based on their incoming profits. A strategy for reducing tax implications is to use deductions to lower their annual income. Small business owners who need a better tax plan can contact Cane Bay Partners now.