How Your POS Can Help With Taxes
Tax season is always stressful, but learning how to utilize your POS system to assist with tax prep might help ease the burden.
A POS system can help with taxes because the system records sales and expense information that small business owners need to file taxes. POS systems can also help you find tax deductions that will save you money, minimize the amount of time you spend filling out tax forms, and reduce costly human errors.
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Using Your POS For Help With Taxes
Your POS system (point of sale system) is software that, when combined with a card reader or virtual terminal, allows you to accept digital payment types such as debit/credit cards and mobile wallets like Apple Pay and Google Pay.
And with a good POS system, you can generate POS reports on expenses such as inventory costs as well as reports on profits. These reports help you find small business tax deductions and accurately calculate your total taxable income.
The following basic POS reports are beneficial for all small business owners filing taxes.
Depending on your industry, you should collect the data and reports needed for additional tax breaks.
You should keep track of expenses such as utilities, rent on commercial properties, vehicle expenses (gas, maintenance, insurance, etc.), office supplies, expenses on travel, equipment repair costs, and software subscriptions to qualify for more specific tax deductions.
Most POS systems are not equipped to efficiently take in all this data independently. So, you will need to integrate accounting software like QuickBooks Online to keep track of expenses over time. Alternatively, you can save your receipts and manually add all your expenses when filling out your taxes.
How To Choose A POS System To Help With Taxes
To choose a POS system that helps with your taxes, look for software that:
- Integrates With Accounting Software: The best accounting software for small businesses provides a more in-depth tax management solution than most POS systems. If your POS system integrates with your accounting software, you can automatically feed sales numbers, employee hours, inventory counts, and more to your accounting software. You’ll save a lot of time and reduce the chance of human errors with automated data imports.
- Offers Detailed Inventory Management: You should always get the most detailed inventory and cost of goods sold information to maximize your deductions. A good POS inventory management system allows you to create tax rules, perform inventory counts, add packaging and labor costs, account for product losses, and more.
- Includes Employee Management Solutions: Some POS systems include employee management features such as built-in employee time clocks, tip monitoring, commission tracking, and paid time off. Other POS systems integrate with employee management tools and HR software. Find a POS system that has the right amount of employee management for your tax filing needs and budget.
Read up on the best POS systems for small businesses to find the right software for you. Also, check out our small business tax preparation checklist to help you file your taxes with minimal stress and no mistakes.