Optimizing the tax deductions your business is eligible for forms an important part of your tax filing process and could form part of your savings strategy. But, every tax credit or deduction you claim from the IRS must be justified as an eligible expense. This can be difficult for small businesses that rely on manual tracking methods, as many costs might be missed or misreported. Having accounting software that tracks expenses can help to simplify this process.
Tracking tax deductions with QuickBooks
QuickBooks accounting software makes tax deductions easier as it automates all expense records and keeps evidence thereof all in one place. Not only does it keep your records updated, but also reduces the risk of errors when filing your taxes. We take a look at some of the ways in which QuickBooks helps to make tax deduction claims a breeze:
1. QuickBooks synchronizes with business accounts
Link your business bank accounts and credit cards to your QuickBooks accounting software. This makes it easy for transactions to be automatically recorded in your financial records directly from the income and expenses taking place with your company bank cards. Direct tracking helps to report accurate and up-to-date financial figures to the IRS.
2. Expense categorization
In addition to tracking expenses directly from your bank accounts, QuickBooks also categorizes these expense items, into categories such as office supplies, rent, stock, or salaries. This makes it easier for business owners to quote and claim for taxable deductions when filing their taxes.
3. Makes the tax filing process easier
It’s no secret that small business owners often wear many hats within their business, which can make it challenging for them to keep a handle on everything while also meeting deadlines. Fortunately, QuickBooks has prepopulated important IRS dates and deadlines for filing upcoming dates and payment due dates. This in addition to the fact that the software allows businesses to e-file their tax returns cuts the hassle that taxpayers may have previously experienced.
Having the right software set up
While QuickBooks holds many benefits for business operations and tax filing alike, the software works best when it is set up with your specific business needs in mind. There is no one-size-fits-all approach when it comes to business finances, but adherence to GAAP guidelines is important if you want to file tax forms that are in line with IRS standards.
QuickBooks offers the accounting functionality that small businesses need to thrive. When investing in this software it is advisable to consult a CPA for a professional QuickBooks setup.
Fusion CPA is a team of professional accounting controllers. We understand QuickBooks’ functionality and can help you set the software up in a way that allows your business to get the most out of it. Learn more about how Fusion CPA uses QuickBooks and other accounting software to help organizations manage their finances and grow their businesses.
This blog article is not intended to be the rendering of legal, accounting, tax advice or other professional services. Articles are based on current or proposed tax rules at the time they are written and older posts are not updated for tax rule changes. We expressly disclaim all liability in regard to actions taken or not taken based on the contents of this blog as well as the use or interpretation of this information. Information provided on this website is not all-inclusive and such information should not be relied upon as being all-inclusive.