Opening a business requires more than coming up with a product or service, creating a website and promoting your new company via social media. There is much to learn, and one aspect of owning a business that many entrepreneurs neglect is proper tax preparation. While filing your company’s taxes may seem daunting, there are steps you can take from the beginning to ensure no important deductions are overlooked and to help you avoid tax errors that may prove costly later on.

Proper business tax preparation begins with understanding the basics and staying organized from the start. Keep your business and personal accounts separated and if you work from home, set up an office that is separate from your living space so that you can claim it as a business deduction. As your business grows, use software that allows you to enter and track expenses, profits and deductions automatically. It is important that you keep your records up to date and review them periodically so that you are not faced with an outdated mess when the time comes to file.

As you sit down to prepare your business taxes, keep in mind that not every expense for your business is deductible. For example, if you work from home and have a legitimate business space that you already claim on your taxes, you can deduct driving expenses from that location to any vendor, customer or location connected to your industry. However, if you work from an office where you share space with other small business owners, driving from your home to that location cannot be deducted. Be conservative about your deductions and check state and federal tax laws if you are confused about what you can deduct to […]