Life itself is only a vision – a dream…RSS
It may seem counterintuitive to talk about taxes a couple of days after tax day, but I figure now is the perfect time about taxes. Instead of offering advice a week before taxes are due—when it is already too late to do anything about it—I think it is better to wait and give the insanity a few days to settle before throwing everyone back into a tax frenzy. While some of these ideas may not apply to you right now, they are things to consider for the future.
Deduct from the Get-go
Taxes are one of those necessary evils, but that does not mean you cannot try to keep some of it from going out of your pocket and into Uncle Sam’s. As a small business owner, there are some ways to reduce the taxes you will pay on some of your income and deduct some of the costs of business.
It’s pretty easy for a lot of people to mix up their personal and business expenses. It doesn’t really matter what type of business you run, it’s still a great idea to keep your own personal money separate from your business money. The most important thing to remember is that it’ll make it easier to tell the two apart when tax time rolls around, and it’ll make it easier for your business to blossom or even sell it down the road.
Remain calm if you haven’t separated your financials, you still have time to get it together.
Seek professional advice
As a small business owner, your focus is more than likely on how to make money, so how to arrange your payroll system may be the furthest thing from your mind. I know you probably have enough things to worry about, but taking the time to figure out a payroll system that works for your company now may save you from running into problems in the future.
Plan for the Future
If you plan for your small business to grow, you need to arrange your infrastructure in such a manner that will accommodate that growth. By starting your business off with a pay structure that is simple and consistent, you avoid the added hassle of having to change to a different payroll system down the road. Paying your employees in a regular and timely manner will go a long way in keeping them happy and you on a regular schedule.
When you’re a humble business, your numbers are everything – so you can’t risk it when you pay an accountant to manage your money.
The CPA you hire shouldn’t be the go-to guy for your tax return; they should be your trusted confidant who points out problems before they spiral out of control and provide the necessary information to make sound business decisions. Plenty of people have this belief that CPAs are they to tackle your tax returns, but at the end of the day, they will save you money and help to grow your business.
Besides that, your CPA will know your businesses deepest and darkest secrets –and make damn sure you trust them with that information.
You know the people who work for you, right? I know you do. What about the IRS? That, as a matter of fact, could be a major headache down the road. Smaller businesses usually give their employees (E) plenty of work to do, and some rely on independent contractors (IC) or freelancers (F) to handle certain tasks or temporary work. These types of people aren’t considered “employees,” right? Watch out: It could be the opposite.
Here is some insight into how to lower your risk of being audited and what you should do if that time comes.
No one knows how much energy the IRS will burn to focus on small business audits in this current economic downturn, but one thing is guaranteed: Small business owners have a higher chance of being audited. Certain cash businesses are more likely to hear from the IRS than others, but teaching yourself how to avoid an audit—and how to handle one if it comes—will help you in the long run.
Working for yourself is a dream for most people. Who doesn’t want to be in control of their hours? Sure, the drawback of being your own boss is hard work and the accountability that comes with the territory. Sadly, running the numbers and paying taxes are also parts of the game of self-employment.
The alphabet boys (IRS) demand that self-employed individuals pay taxes that factor in Medicare and other taxes, which are closely related to those paid by employees. The IRS requires self-employed individuals to pay quarterly taxes as a substitute for withholding, which is applied against an employed person’s income. These steps make it difficult when it comes to handling self-employed tax rules, more so than the usual rules followed by the employed.