POS software can save you money on your taxes? That’s right!
POS software will help you automate the tracking of every aspect of your business from cost of goods sold, employee hours worked, sales reports, and more. It will give you the data you need to make good decisions and keep your finger on the beating pulse of your business. You’ll save time, control costs, and grow revenue. And what’s more? If you use it right, it can help you optimize your affairs for the tax man. This is how:
Providing reliable income and sales tax information
Accurate reporting of income is key when it comes to completing your business tax return. Even minor mistakes can lead to steep penalties. Your POS software provides you with the most accurate sales information possible and clearly distinguishes sales tax and other non-income fees from total sales. Instead of having to take the time to calculate your final gross receipts, you can simply pull the information from your POS software sales reports and be confident that the amount reflected is correct. When both the gross receipts and the returns and allowances figures are correct, you can be certain that you’re reporting your income correctly and not over or underpaying on your taxes.
Balancing income with investment
Sophisticated business planning isn’t about maximizing your take-home income each year. It’s about balancing your take-home income needs with tax-efficient investments in the future of your business. Your POS software will provide real-time sales reporting information that can help you monitor your current revenue and project your end-of-year financials. If you’re on course for a strong year, you can take steps to make strategic and tax deductible investments in equipment, staff, and other business costs. There is a decent amount of special legislation (e.g. Section 179) that pertains to the amounts you can write off, so it’s worth doing your research in this area.
Maximizing your cost of goods sold deduction
The cost of goods sold is one of the most important deductions for small businesses. Ensuring that you take every penny of this deduction can help you to minimize your taxes owed for the year. Reports generated by your POS software can provide you with accurate information to obtain the correct figure to enter on your Schedule C. Within seconds, you can obtain your beginning inventory figure, purchases, materials and supplies, and miscellaneous costs related to your inventory. You’ll also get a more reliable end-of-the-year inventory figure than with a non- digital solution. POS software greatly reduces the need for you to complete a time-consuming physical inventory at the end of the year, while ensuring that you’re able to take the full deduction amount to which you are entitled. And if you do feel the need to do a manual reconciliation of your inventory with what’s in the system, having an integrated barcode scanner is a huge time saver. The above is an extract from ‘Integrating your Accounting Software with Your Point of Sale’ an ebook from ShopKeep’s point of sale university series. You can check that out below or visit our Point of Sale 101 video series for a more introductory guide.