Few of small businesses that start survive for more than ten years. These points to the fact that running a small business successfully is pretty hard. It gets more complicated when you add the burden of filing taxes every blessed year.
This is why you have to get a financial expert to help with your tax and other financial work. Experts are vital because they will help with your tax, and reduce the risk of making a decision that might put your company at risk and make you lose money in the long run.
Here are some proven tax counseling advice for small business
The role of an accountant in your business is more than preparing taxes and your financial statement. They need to work with you for the entire year to track Income and expenditure. This is important to check any cash flow problem that might want to arise.
Many small businesses trivialize the role of an accountant, yet they are vital to the survival of your business.
The IRS also has a copy of the 1099-MISC forms that you get. This allows them to match the Income you claim with the ones they know you got. This is why your Income must match: both the one you are sending to Uncle Sam and the one reported on your 1099. Any discrepancy could trigger a red flag that might warrant an audit.
With detail and accurate records, you can have a correct tax return. When you, however, do not have a proper record, you could leave deductions out, which might ultimately set you up for an audit.
With this in mind, using accounting software is a good idea. There are basic versions that are cheap and help you organize your income and expenditure.
One way to attract the searchlight of Uncle Sam is to report personal expenses as business expenses. Even if you report your business expenses right, the IRS will explore your personal account for commingled money.
This is why you need a distinct credit card and bank account for your business. Besides, it would be best if you dedicated business expenses strictly to those accounts.
Small business owners often do not remember to take into account the difference between their gross and net income. As a result, if you charge more for a product that costs more, you will lose more no matter the number of units you sell.
It might cost you $180 to make a product, for instance. If you sold these for $230, you have a gross income of $50. When you, however, deduct your expenses, the net Income might be $15. Knowing the difference between the two will go a long way in making you profitable.
You might be paying extra taxes if you do not classify your business well. As a result, decide if your business fits well as an S Corporation, C Corporation, Single Member LLC, Sole Proprietor, Limited Liability Company, or Limited partnership. Each of the categories has various effects on the tax you pay.
This is where the services of an attorney and an accountant are essential as they can help deduce the correct classification for your business.
The best way to manage payroll is to hire a company to help with that. Be sure to, however, go for reputable companies only. Trying to save money by hiring a low-quality payroll service usually come back with severe consequences. The company might not be remitting payroll taxes, which could put you in trouble with the IRS. Bear in mind that the IRS checks every quarter to know if you are paying your payroll taxes.
A knowledgeable accountant will direct you on the best steps to take to in growing your business. They can advise you on the best way to contribute to your retirement funds. They know if it is an excellent move to take a bonus or delay it.
Your account can also tell you if buying a store or small space for your business will save you, rather than renting.
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