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Five Tips for Small Business Owners this Tax Season The start of a new fiscal year is bittersweet. On one hand, the new year is complemented with feelings of fresh beginnings and New Year's resolutions for work and life. On the other hand, it's tax season.

Courtesy of Adobe

Small business owners rank doing taxes and meeting with their accountant as their #2 dreaded task—only ranking below making cold calls—according to an Adobe survey of small businesses. Their dread isn't surprising because tax season is complicated. Keeping track of so many different forms, receipts, and documents is a daunting task for any small business owner.

Filing taxes is even more complicated for new business owners and entrepreneurs, and this year, there are many leaders going through the process for the first time. The US Census Bureau reported that more than 5 million new business applications were filed in 2022.

Whether you're a new business owner filing taxes for the first time or you're a seasoned small business owner looking to simplify the dreaded process, here are five tips to take into the 2023 tax season.

Figure out your deductions.

There are many benefits to being a small business when it comes to tax deductions and tax credits. If applicable, you can deduct startup costs, raw materials you purchased to provide goods and services, small office supplies (things like pens and paper), office space rent, home office expenses, insurance premiums, and business travel expenses. You can even deduct employee salaries and benefits like performance bonuses and insurance premiums.

There is a long list of deductible tax categories that are worth researching to save money on day-to-day small business operations.

Read the fine print.

Keep in mind that there are parameters for popular tax deduction categories. For example, business travel expenses can be written off if the trip meets these requirements: the trip was necessary to the business, it was conducted outside the city or area of the business location, the trip took longer than a normal workday and required a stop to rest or sleep.

For home office expenses, recipients that meet the criteria can deduct five dollars per square foot, up to a maximum of 300 square feet. To qualify, your work area must be used exclusively for business, meaning the dining room doesn't count, and it must be used regularly as your principal place for conducting business.

Gather details for deductions.

Once you have a grip on potential deductions, the next step is the source of the dread: collecting documents. Some are easier than others. For example, it should be simple to collect paperwork to deduct insurance premiums and rental agreements.

However, to write off office supplies and business meals, you'll need to keep a record of all expenses and receipts. It's helpful to create a spreadsheet to list all the items, especially since you'll need to provide the date and location, business relationship with the person or people you dined with, and total cost of the meal for business meal expenses.

Digitize your documents.

Only 53% of small businesses have digitized the process of filing their tax returns, which means there are still millions of small businesses filing their taxes—including a shoebox of receipts—manually. Not only is this time consuming, but it's prone to errors.

Make tax prep as easy as 1, 2, 3 with Adobe Acrobat. You can easily organize and manage all your tax documents in a snap with Adobe Scan, combine them into one PDF, and access them in one place. With the Adobe Acrobat extension for Google Chrome, it's easy to highlight, add notes, comment on, fill in and sign PDF tax documents, directly from your browser without having to leave or download a separate app.

Microsoft Edge users now have Adobe Acrobat as their built-in PDF reader, with richer rendering for more accurate colors and graphics, improved performance, strong security for PDF handling, and greater accessibility.

The free Adobe Scan mobile app is another option that turns paper documents like W2s and receipts into PDFs so tax prep is paperless and effortless. Additionally, Adobe Acrobat offers password protection to share tax documents securely and confidently.

Send it to your tax preparer for review

More than a quarter (26%) of small business owners plan to file tax returns online on their own, with no accountant, in the future. While this might sound cost effective, it might be cost additive if you're not well versed in the many ways to save on tax deductions. Work with accountants to evaluate what tax breaks you qualify for and lean on their expertise to ensure all the paperwork and requirements are met before filing.

For example, how you file taxes depends on how your business is structured. There are different processes and forms for sole proprietorship, partnership, limited liability company, C corporation, S corporation, and nonprofit.

Seventy percent of small business leaders are concerned about economic instability and inflation, Adobe research finds. Tax season is an opportunity to ease some of these stresses as write-offs can mean up to thousands in cost savings. While it may be time consuming, leaders should prioritize collecting and preparing documents and Adobe Acrobat can help.

Learn more about tax prep with Adobe Acrobat and see how to scan, combine and organize and protect documents this tax season.

Lisa Croft, Director of Digital Media

Director of Digital Media