Smart financial planning makes tax time easier for new small business owners.
Financial Essentials for New Businesses
Small business owners have many tax-related responsibilities, but they’re also entitled to some tax breaks. As you begin your startup, make sure you’re aware of the following 10 tax tips.
Know Your Business Type
Sole proprietorships have different tax guidelines than corporations. Keeping up with the tax requirements for the many different business structures can be a challenge, but consulting with a cloud CPA can help.
Submit Estimated Payments
Self-employed people must submit quarterly payments to the IRS. These payments can reduce financial obligations come tax time. Underpayment can result in penalties.
Deduct Startup Costs
You may be able to deduct up to $10,000 in business and organizational costs from your startup. A cloud CPA can advise you on whether your startup qualifies.
Understand Reporting Methods
You can report earnings in the year they are earned (accrual) or the year they are received (cash). The IRS accepts either method as long as you and your cloud CPA are consistent about it.
Open Business Accounts
Don’t try to run your business out of your personal checking or savings accounts. Opening a separate account for your business is a better financial strategy that will reduce tax-season headaches.
Use a bookkeeping system from the very beginning to organize receipts, payments, income and more. Come tax time, information about deductions and other essential figures will be right at your fingertips.
Remember Your Contractors
You might not have employees, but individuals to whom you pay $600 or more in a year will need to receive a 1099-MISC form. Keep track of who needs to receive one of these with a cloud accounting system.
Consider Office Expenses
Running an office at home or elsewhere costs money. Your cloud CPA can advise you on which of those office expenses can serve as tax deductions.
Keep Equipment & Supplies Separate
Small items for everyday use are considered supplies. Larger expenses are classified as equipment. Deductions work differently for each. Keep the two separate by using a cloud accounting system that can also help reduce headaches as you grow and purchase more.
Get on the Cloud
Another way to succeed as a startup is to keep your operation lean. A great way to do that is to keep all data on the cloud to allow you and your staff flexibility.