An Enterprising Endeavor!
Author: Keith Huggett
Starting a new company is exciting, but business taxes can sneak up on you if you don't plan ahead. It's easy to get caught up in the enthusiasm of launching a new company, but keeping your books in order from day one can save you a lot of money in the long run.
Follow these tips to help you stay on top of your business taxes:
- Work with a tax expert. If you do not already have experience with business taxes, work with a financial professional who does. Tax mistakes can be costly and these expensive errors are entirely avoidable if you know what you are doing.
- Select the right business entity. There are several types of business entities and the one that makes the most sense for your company will depend on a variety of factors. This is the type of decision that your tax adviser can help you with.
- Set your books up properly. Depending on the type of business you have, you will have to set up your chart of accounts to account for certain contributions or expenses. For example, if you invest in the company, it is important to categorize this amount as a capital contribution and not as taxable income for the business. You can also choose to outsource your accounting services entirely. Your tax adviser can provide information about this services as well.
- Don't forget about estimated quarterly tax payments. As a business owner, you have to make quarterly payments based on your estimated earnings. Your tax adviser can help you estimate this amount. Underpaying can result in penalties, while overpaying takes cash out of your pocket unnecessarily.
- Take the home office deduction. If you work exclusively from a home office you are eligible to take a tax deduction on the associated expenses. Your tax adviser can help you calculate the correct amount so you do not overestimate -- or underestimate -- the deductions you are entitled to.
