Helpful Tax Information for All New Small Businesses Owners
As an entrepreneur, you are responsible for not only your personal taxes, but also the taxes of your business. If you are not taking the steps necessary to ensure your taxes are prepared and ready come tax time, you will find that you are scrambling and stressed out.
Even though you are already juggling enough as it is, there are some things that you may want to do to ensure tax time is easy when it does roll around. Below, we will go over some important business finance tips and tricks to help you find the best tax benefits available.
1. Say No to Joint Accounts
One of the biggest mistakes that most new entrepreneurs make is that they do not open a business checking account. Using your personal business account to run your business is a huge mistake and should never be done.
One of the reasons new business owners typically choose to use their personal account is because they are afraid the business may fail. While it may, you are only causing tax problems for yourself.
The best piece of advice is to open a business checking account and even a savings account if you choose. The only thing that should be deposited into or withdrawn from these accounts is your business related expenses and income.
2. Hiring Employees
When your business first starts out, you likely do not need any employees right off the bat. Employees are expensive and you will need to provide payroll, unemployment, insurance, and more. It can be a hassle and headache for a new business owner to try to accomplish all of this while keeping his or her head above water in the first couple of year.
One of the best things that you can do as a new business owner is hire subcontractors or independent contractors. Independent contractors are not employees of your business and they are free to do their own thing. This means that you only pay them for the work you need them to complete without the hassle of benefits, etc.
You will need to keep in mind that independent contractors are not employees and you cannot require them to work specific hours, etc. If you need help deciding what the best route is for your company, speak with a local tax professional who can guide you correctly.
3. Claim Your Deductions
When it comes time to file your taxes, make sure that you are always claiming all of the deductions you can and do not leave any out. You will end up spending a bunch of money purchasing all of the equipment, furniture, and items you need for your business and this is a great way to catch a break on them. Remember to keep your receipts though.
One unique deduction you can take that many people do not know about is the research and development deduction. This deduction accounts for up to $5,000 and can be taken when you spend time creating a product. There are some stipulations, but it is ideal for many companies who do spend a lot of time doing this.
4. Payroll
Although we mentioned above that you may want to wait to hire employees, sometimes it is unavoidable, and you need to. If you do have employees, you must make sure that your payroll is together correctly. When it comes time to file your taxes, you will need to provide all of your payroll information to the IRS.
Before an employee can work for you, you need to make sure they are filling out the proper forms such as a W-4. You will need to ensure that your company is deducting the correct amounts from employees’ paychecks when it comes to social security and other taxes. If you are not, you may find that you owe a hefty penalty to the IRS and you have to pay for the missing money.
Many new business owners are hung up on this part and it is wise to seek help from a professional CPA or tax agent. They can help you setup the correct documents and deductions.
When it comes time for your new business to file taxes, make sure that you claim all of the available deductions and that you do not leave anything off the tax return. When you need help filing your taxes, rely on a tax professional who can help you understand all of the confusing jargon.
