By: Renee Morad If you're a small- to medium-sized business (SMB) owner, filing your taxes earlier in the year in January or February — rather than waiting until the April tax deadline approaches — can save you money, time and a lot of hassle down the road.
Given the growing threat of tax identity theft, filing your taxes early can help reduce the chances of a thief submitting a fraudulent return on your company's behalf. But that's just the start. Here's a rundown of how getting a head start on your taxes could be the right move for your business.
Reduce Your Chances of Identity Theft
Tax-fraud criminals look for opportunities to file fraudulent tax returns and steal refunds. Many people assume these criminals target individuals, but they often also go after businesses.
SMB owners can sidestep this risk by filing their taxes early and reducing the chance that thieves can file a fraudulent return. If a thief files after the business does, the IRS will flag the return and know it's not legitimate. However, if a criminal files first, the IRS may not have a suspicion that it's fraudulent until after the business owner files.
By staying organized and securing tax documents as soon as they come in, you can also prevent a criminal from stealing sensitive business information that could lead to full-blown identity theft. If the information is stolen, a criminal could compromise the name of an entire company and use it to acquire credit. The criminals could choose to go on a spending spree of sorts, purchasing computers and other electronics that might seem like business necessities but then will later be sold for cash. This can ruin a company's ability to obtain future credit, put a drain on finances and cause a major disruption in workplace productivity.
Avoid Costly Tax Mistakes
When SMB owners file early, they're less likely to make costly errors, which can happen in the haste of meeting a deadline. This can save a company hundreds or thousands of dollars in overlooked deductions or by avoiding errors, such as using an incorrect tax rate. Filing early also provides access to the best tax preparers, who might otherwise be unavailable deeper into tax season when their schedules are filled.
Practice Being Proactive
SMB owners — just like anyone — are creatures of habit, and chances are, if you are proactive and organized about filing your taxes early, you'll also carry that approach over to other obligations, like preparing for a big presentation or meeting important deadlines. Filing your taxes early can perhaps mean sizable tax savings, and it can also translate over to proactive habits that can boost company productivity and even your bottom line.
The contents of this article are for informational purposes only. The information should not be relied upon as replacement for professional tax advice.
About the Author
Renee Morad is a New Jersey-based freelance writer for LifeLock.com. Her work has been published in The New York Times, Smart Money Magazine, TheStreet.com, The National, Business Insider, The Huffington Post, MSN Money, Xfinity.com and other outlets. She was formerly a home page editor for Xfinity.com and a staff reporter for Smart Money Magazine.
All content provided herein is for educational purposes only. It is provided “as is” and neither the author nor Office Depot, Inc. warrant the accuracy of the information provided, nor do they assume any responsibility for errors, omissions or contrary interpretation of the subject matter herein.