In the fast-paced world of startups and new business ventures, there’s often little time dedicated to figuring out and filing your first round of taxes to the Internal Revenue Service. Too often do small businesses wait until the very last minute to crank away at their taxes and end up leaving good money on the table – or worse, paying penalties and facing other legal problems.
Without a dedicated accountant or bookkeeper on your side, handling your new business’ tax obligations can be a daunting process. Here are a few strategies for avoiding the ire of the IRS and getting your business started off on the right foot.?
1. Pay Your Quarterly Taxes
Except for during your business’ first year of operation, all businesses and self-employed “sole proprietors” are required to pay taxes on a quarterly basis. Even if your tax adviser says your company isn’t required to do so, it’s often a more manageable and predictable expense rather than having to wait until the end of the year.
2. Don’t Mix Personal and Business Expenses
During the day-to-day flow and sometimes urgent needs of your business, it can seem like an easier option to worry about the breakdown of your expenses once tax time rolls around. This won’t just lead to headaches come the filing deadline as you scramble to locate receipts, it can land you in hot water if you attempt to write off a personal expense as a business one (or visa-versa). For things like office supplies, computer equipment, and travel expenses, be sure to keep track all year long or you’ll feel the hurt later on.
3. Choosing the Wrong Structure
Whether you file as an S-Corp, C-Corp, or LLC, the tax obligations of your business may be significantly different depending on how your business is structured. Many startups begin as sole proprietorships or partnerships, leaving more tax liability on the part of those filing as self-employed.
If you’re still working your way through your first tax season as a business and need a guiding light, contact the team at Honest Buck Accounting. With straightforward and transparent accounting, bookkeeping, and tax advisory services all under one roof, Honest Buck can be the affordable, reliable partner to help your small business succeed all year long. Contact us today for a consultation or give us a call at 206.533.7097.
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