Did you just start your own lawn service or construction company? Launching a business is one of the most exciting things you can do, but you must be prepared for a whole new set of tax laws and requirements for small business owners. These tips can help you remain compliant with all tax authorities and assist you in keeping every possible penny you earn in your enterprise.
— Create a tax calendar.
Owning a small business presents a host of new tax-filing deadlines throughout the year. Everyone knows about April 15, but are you aware of quarterly estimated tax payments? How about corporate filing deadlines and payroll filings? Along with federal tax filings, does your state or city also have business filing requirements?
Because there are countless new deadlines as a business owner, create a tax calendar for yourself to stay organized and on top of your requirements. Handy mobile apps make this easy to do. Failure-to-file and failure-to-pay penalties can take a big bite out of your business budget – the last thing new business owners need.
— Keep solid financial records.
If you’ve never been big on recordkeeping, it’s time to change that attitude. As a business owner, you must keep track of every purchase, expense, paycheck, and any other financial activities in your venture. There are several reasons for this, but the main reason is so that you can claim eligible business deductions.
The IRS often wants proof that the expenses you’re claiming are for business purposes, so you must keep receipts on file. You should also keep and organize copies of invoices, bank statements, and any relevant records you may need to reference in the future. Consider digitizing these records as well.
— Understand the current or future tax structure of your business.
If you currently work as a sole proprietor or as a member in a general partnership, you likely know a little bit about how you handle all business tax matters on your personal income tax return – and on the personal returns of any partners. However, if you have or decide to launch a formal legal entity like a corporation or LLC, you must understand the unique tax structures of these business types.
With an LLC, you can choose how to have your business taxed. With an S corporation, taxes, deductions, credits, and losses pass through to your personal taxes. With a C corporation, your company is taxed separately at the corporate level.
— Understand basic business tax breaks, both deductions and credits.
The biggest difference between personal taxes and business taxes revolves around tax breaks. More specifically, there are hundreds of business tax deductions you can claim when operating a startup company that you’d never be eligible for as an individual. These may include writing off the following expenses:
- Home office expenses
- Vehicle expenses
- Startup costs
- Ongoing operational expenses
- Meals and entertainment
- Travel expenses
- Medical expenditures
There are also a number of business tax credits, such as credits for purchasing environmentally-friendly business equipment and hiring certain types of employees.
The bottom line is that you must claim all business tax breaks for which you qualify to reduce how much your business tax bill is each year and to help you keep more money in your business bank account.
— Get a cloud-based bookkeeping system in place.
Statistics have shown that if you spend one hour per day working on bookkeeping for your small business, you’ll wind up spending 6 full weeks per year on this mind-numbing process. Who has time for that, especially a time-starved business owner like yourself?
This is where technology makes life so much easier. A cloud-based bookkeeping system can offer incredible convenience, helping you save both time and money. Such an online portal can connect directly with your bank accounts, help you track transactions, create invoices, store receipts, and so much more. With today’s mobile apps, you can often manage your books right from your smartphone.
So, delete your Excel spreadsheets you’ve been using to manually input this financial data. Get in on the latest in bookkeeping technology now.
— Hire a professional accountant.
Some people can easily prepare and file their simple personal tax returns. But doing the same thing for a small business is a daunting task.
Consider hiring a professional accountant or CPA to handle all of your business tax needs. If you find an accountant who has worked with business clients in your specific industry, you’ll be guaranteed to take full advantage of all the tax breaks available to business owners like yourself. You’ll also be able to focus on what you enjoy most about being an entrepreneur, and you’ll have the ability to make more money by having someone else take care of the time-consuming nature of business accounting.
Trending Articles
