Small Business Tax Advice for New Entrepreneurs

As a new entrepreneur, you may be seeking out every bit of small business tax advice that you can find. The prospect of filing taxes for your new small business can be very intimidating. Here are a few things to keep in mind in regards to small business taxes.

Get Help

As a new entrepreneur, one of the most important things that you can do is to hire someone to help you with your taxes. Many new entrepreneurs think that they can handle the tax planning and filing on their own. However, once they see how much work is involved, they quickly change their opinion. In most cases, new entrepreneurs will want to hire a competent accountant to help them with this process. A good accountant can look at your balance sheets and financial projections to determine a unique tax planning strategy for you. This will help you minimize your tax liability and stay within the law.

Save All Receipts

As a business owner, you will be able to deduct all legitimate business expenses from your taxable income. Therefore, anything that you buy for the business, you should keep track of so that you will be able to deduct it later. 

Many business owners do not keep receipts for purchases that are less than $75. Many people have been told that they do not need to keep receipts for small purchases. Technically this is true. However, if you plan on deducting your purchases, you will need to know exactly what you bought and how much the total was. Therefore, if you do not keep a receipt, you will have to keep a separate logbook that details all of these transactions. Instead of going through this extra step, it is much easier to keep a receipt of each transaction. When tax time rolls around, you can simply hand all of the receipts to your accountant and let them handle everything.

End of Year Considerations

When you own a business, your actions at the end of the year can make a big difference in your overall tax liability. There are a few different short-term fixes that you can employ to cut down the amount of taxes that you owe.

If you are getting close to the end of the year and you have extra cash flow, you might want to consider purchasing extra supplies. If you know that you will need things at the beginning of the next year, purchasing them now will give you more expenses to offset income.

At this time, you might also want to consider deferring any payments that are owed to you. If you have a relationship with your clients, you might want to explain to them that they can wait until the beginning of the new year to make their payments. This will reduce your overall income and the amount of taxes that you owe. 

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