The very last thing you want as a business owner is to be on the bad side of the IRS. You don’t want those guys calling, you don’t want them knocking at your door and you certainly don’t want them rooting around in your deductions. To keep the tax man/woman/person at bay, it helps to follow the proper tax laws from the get go. Here are a few tips that you are urged to follow if you don’t want to be, as pig Latin enthusiasts might say, auditeday.
Starting a Business and the Last Thing You Want to Think About
These new business tax tips will make it so that you can focus on running your business without having to worry about taxes at all. These tips come straight from the Internal Revenue Service. The tax information that you will want to pay attention to will depend on the type of business you run, as well as how much revenue you pull in each year. For example, there are new business tax tips for those businesses that pull in $10 million or more and then there are tax tips for those that pull in less. You are encouraged to visit the IRS website to find the section that you belong to in order to fulfill your tax obligations when starting a business.
Here are the most common tips for starting a business and you are encouraged to follow them if you hope to avoid the dreaded audit.
1. Select the Proper Business Structure: Do you plan to start your business all on your own or do you have a partner to assist you? Do you have a group of people or do you have an entire board of directors that are already calling the shots? The decision to start a business as a sole proprietor, partnership, Limited Liability Company or Corporation will determine what tax laws you are responsible for upholding. In addition to the IRS, you might want to contact the SBA or Small Business Administration, as they oftentimes offer free counseling for new business hopefuls, and that’s an excellent way to get your hands on all the great advice and new business tax tips you need at no cost.
2. Hire an Accountant: You probably didn’t want to see this point listed, as the less money you are forced to spend when starting a business, the better. While the thought of spending the cash to acquire the services of a CPA may dismay you, you will most likely thank yourself a week into hiring the professional you find. An accountant will just make your job easier. He or she really will. Think about it. You won’t have to absorb and read all you can on tax tips, let alone new business tax tips, because your accountant knows all that stuff already. You can focus on the most important stuff, like getting your business off the ground, and your accountant can handle all the dirty work. Just make sure that, if you do end up hiring an accountant, you keep very accurate records and, whatever you do, keep your business expenses separate from your personal ones. Doing so will make both your lives easier and, ultimately, you’ll reap all the benefits.
3. Withholding Taxes From Employees: If you have employees that you will pay regularly, you must know exactly how much to withhold from their paychecks so as to be compliant with the government. Of course, your employees will dictate to you how they want their taxes withheld by filling out the appropriate tax forms. Contact the IRS or the SBA to find out how this is done and get a handle on it, because you and your employees could get in trouble with the tax man, and none of that is any good for anyone. The goal is always to avoid the tax man however possible and understanding the proper tax laws is one good way to go about it.
4. Know Your Deductions: While you can rely on your accountant to keep an eye on all of your possible deductions when starting a business, it never hurts to be a little proactive; particularly when it can mean getting to keep more of your money come tax time. It is important for you, as a business owner, to know about these tax tips so that you don’t have to pay in so much at the end of the year, or however often you choose to pay-in.
As a person starting a business, you are allowed to deduct any expects that lead up to your sales, such as warehouse expenses, the cost of manufacturing and even gas and mileage if the product is delivered by your company to the store that sells it.
You can also deduct your home and car if you have a home office, and part of your rent and energy costs, too. Even if you hire an accountant to know and understand all the new business tax tips, it will always pay off to know how much you are required to pay and how you much you might be able to keep come tax time.
Starting a business is difficult and there are plenty of new business tax tips to be had, but the biggest one is to learn the ins and outs of tax law. Learn it and understand it, no matter how difficult it might be. The sooner you do that, the more protected you will be against future tax offenses. For getting on the bad side of the tax man is never where you want to be, especially when you’re in the process of starting a business and trying to change your life for the better.
Image Source: SalFalko on Flickr
CHALLENGE Yourself to Profit!
Free Download: Build Your Profit-Generating Online Business With This Free Blueprint
Sign Up, follow the easy steps and You'll get the tactics, strategies & techniques needed to create your online profit stream. It's free!
