As a small business owner, it is imperative that you make sure that you are using the right tax preparation services. Tax preparation isn’t an easy thing to handle on your own, so finding the right partner to work with you is critical to making sure your business is up to date, and everything is filed on time and correctly. SmarTax, LLC. in Pembroke Pines has a team of tax experts that can help you figure out which services are right for you and your small business.
Deciding on the Right Tax Preparation Services for Your Small Business
Tax preparation is not something most people look forward to, especially if you have to handle your personal taxes and your small business taxes. Dealing with the guidelines, requirements, and laws can be overwhelming and stressful, which is why it’s crucial to rely on the experts. There are a number of different options available to small business owners that can assist with the preparation of taxes, and if you don’t know much about these programs, you may end up picking one that isn’t the best match for your needs. Below is some general information about different services and why they may or may not be the right ones for you and your business!
Accounting is probably your least favorite part about owning your own business, but it is crucial that you understand the basics for you to run an effective and lasting business. If your sales are less than $25 million every year than there are two options to consider using for your accounting needs. The first is the cash method, and the second is the accrual method.
The cash method is when you record your income as it is received and your expenses as they are getting paid. For instance, if you charge a client $500 on October 21 and you are paid on November 3, the payment received would get recorded in the month of November since that is when you physically got the money. This is definitely the simpler of the two methods. However, it is crucial to note that the cash method does not take into account either accounts receivable or accounts payable since it can only be applied to payments from customers when the money is received or when you are paying an expense when the money is actually leaving your account. One big advantage of the cash accounting method is that it is an extremely simple process, which is why so many small businesses decide to use it. It is easy to keep track of money as it leaves and enters your bank account, and because there is no need to record accounts receivable and payable bookkeeping becomes a breeze to handle. On the other hand, one disadvantage of this process is that it doesn’t provide an accurate depiction of your finances as a whole. Since this method doesn’t track all the incoming revenue and outgoing expenses, it is easy to believe you are having a very high cash-flow month when it reality it’s the result of the prior month’s work. This can become a problem when you’re trying to track trends and find out your busy and slow times.
The accrual accounting method tracks and records revenue and expenses when they are billed regardless of when the money is actually sent or received. Keeping the same example from above, if you bill a client on October 21, you will record that income in the month of October, even if you don’t get the money until November. One advantage of this method is it will provide you with a clear short term picture of your business’ financial situation. On the flip side, a disadvantage is that with accrual accounting, there is a complexity that doesn’t exist with the cash method. There is also a bunch of paperwork that is included in the financial reporting process. For a small business owner, the accrual method can be much more complicated and expensive to implement.
Contact Us For Tax Preparation
SmarTax LLC provides tax preparation in the Pembroke Pines area. We assist our clients with all of their tax needs to make sure they meet all their deadlines and requirements. Call or visit us today to find out about our tax preparation services and how we can help you!!