You love your POS system. And for good reason, it’s a miracle worker!
But did you know that it could also help you save money on taxes? It’s true. POS software has the ability to automate the tracking of every aspect of your business —from cost of goods sold, to employee hours worked, to sales reports. It will give you the data you need to make good decisions while you keep your finger on the beating pulse of your business. You’ll save time, control costs, and grow revenue. If you take full advantage of what your POS has to offer, it can also help you optimize your affairs for tax time. Here are 3 tips for leveraging POS software for improved tax savings in your small business.
1. Using Sales Report Summaries for Reliable Income and Sales Tax Info
As a small business owner, accurately reporting sales on your business tax return can make or break your business. It’s important to steer clear of mistakes, because even minor ones can lead to steep penalties that eat away at potential cost savings. Luckily, most POS software provides you with an analytics dashboard containing the most accurate sales information possible. This allows you to effortlessly distinguish sales tax and other non-income fees from total sales. So instead of spending hours manually calculating your final gross receipts, you can simply pull the information from the sales reports in your POS software 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 neither over, nor underpaying on your taxes.
2. Maximizing Cost Savings of Goods Sold Deduction
For small business owners, the cost of goods sold is one of the most important deductions. Ensuring that you take every penny of this deduction can help you to minimize that taxes you owe for the year. Inventory Value Reports generated by your POS software can provide you with accurate information on stock items and raw goods to be reported in your Schedule C. Within seconds, you can easily identify and obtain your beginning inventory figures, purchases, materials and supplies, not to mention any miscellaneous costs related to your inventory. Overall, you get a more reliable end-of-year inventory figure than you normally would using a non-digital solution. POS software not only reduces the need for you to complete a time-consuming physical inventory at year’s end, It also allows you to effortlessly identify 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.
3. Using Real-Time Sales Reporting to Balance Income with Investment
Business planning isn’t about maximizing your yearly take-home income. It is however about balancing your take-home income needs with tax-efficient investments for your business in the future. Quality POS software provides small business owners with real-time sales reporting information that simplify daily revenue tracking and your end-of-year financial projections. Are you 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.
Now that you know how your POS system can save you money on your taxes. It’s time to put that plan into action. If you’ve invested in a quality POS system, you should be able to integrate your POS with your accounting software. If this isn’t possible with your current system, it might be time for an upgrade. If that’s the case, here are a few features to look for when shopping for a superior retail POS.