The Self Employment Tax
A self-employed person has to file additional taxes besides their income tax. This usually amounts to an extra 15.3% burden for small business owners. This is because employers and employees each pay 7.65% for Social Security and Medicare taxes, so a self-employed individual will have to pay the total amount.
Solution
Small businesses should take advantage of the many business deductions available to small businesses to counteract this tax burden.
These include:
- Travel by airplane, train, bus, or car between your home and your business destination. (If you’re provided with a ticket or you’re riding free due to a frequent traveler or similar program, your cost is zero.)
- Fares for taxis or other types of transportation between the airport or train station and your hotel, the hotel, the work location, and from one customer to another, or from one place of business to another.
- There is shipping of baggage and sample or display material between your regular and temporary work locations.
- Using your car while at your business destination. You can deduct actual expenses or the standard mileage rate, as well as business-related tolls and parking fees. If you rent a car, you can remove only the business-use portion for the expenses.
- Meals and lodging.
- Dry cleaning and laundry.
- Business calls while on your business trip. (This includes business communications by fax machine or other communication devices.)
- Tips you pay for services related to any of these expenses.
- Other similar ordinary and necessary expenses related to your business travel. (These expenses might include transportation to and from a business meal, public
Tax-Related Issues Do Not Begin During Tax Season.
Tax saving opportunities are available from January 1st to December 31st and are not limited to the tax season. You must have someone who can advise you in real-time to make the proper decisions through each crucial step of building your business.
Someone who waits till tax season to seek advice will realize most more substantial options are no longer available. Every business transaction made by the business owner will have a powerful impact on their tax liability. A solid tax professional will guide your business through every crucial moment, allowing for more financial security and stability. They will ensure you are not sidelined with incorrect information, leading to lousy business tax decisions.
A tax professional can offer the following benefits to a small or medium-sized business:
- Tax professionals will study your business structure and explain to you what is the best system for your particular businesses’ tax liability. Then, they will help you alter the form if this is the best course of action.
- Tax professionals will examine how your business is paying and reporting independent contractors and ensure that you are compliant in this area with all IRS regulations to avoid harsh penalties.
- They can look at past tax returns for deductions that have been missed or valuable credits available to the business.
- The tax professional can point out all compliance issues that can be immediately corrected throughout the year. Hence, you have the most robust confidence with all your regular business transactions.
Remember that every business is different, and there will never be a one-size-fits-all solution to tax questions and problems. This is why it is vital to have a tax professional on your side to guide you through an often confusing tax code.
It Is Never Too Early To Plan For Taxes
2021 was indeed a year that had a lot of personal challenges for small businesses. However, understanding your tax liability for the coming year is always a good idea, and it is never too early to start. There is no reason that taxes need to be a mystery, and you can forecast what you will owe in the coming year.
Net Profit
Do you correctly understand how to handle your cash flow? Are you going to pay taxes purely based on
What is available in your checking account? Unfortunately, many business owners do not realize that their available cash is not the same as the company’s net profit.
Remember The Quarterlies
Since self-employed owners do not get taxes withheld from their paycheck, it is good to withhold the correct amount and send the Internal Revenue Service quarterly payments. This is particularly important if your tax liability is over $1.000. Ignoring quarterly payments could result in costly interest payments or penalties.
The Self Employment Tax
A self-employed person has to file additional taxes besides their income tax. This usually amounts to an extra 15.3% burden for small business owners. This is because employers and employees each pay 7.65% for Social Security and Medicare taxes, so a self-employed individual will have to pay the total amount.
Solution
Small businesses should take advantage of the many business deductions available to small businesses to counteract this tax burden.
Small Business Should Never Underestimate Taxes
The Internal Revenue Service has been more active in targeting small businesses for tax audits in several years. New companies have spent 2.5 billion each year preparing taxes and answering questions from the IRS about tax return inquiries.
However, there are things that any new business can do to lessen its tax burden. We will discuss how choosing the correct business entity can make your life as a new entrepreneur much easier in the coming future.
Getting A Tax Resale Certification Is One Of The Best Things You Can Do As An Entrepreneur
As a self-employed person, getting a tax resale certificate can save you money on taxes.
In short, a retail tax certificate allows you not to pay sales tax on items that you plan to resell. This can also apply to supplies that will be used in products that you will resell, such as wood for a cabinet.
However, the process can be complex, and the rules are different for each state. That is why TaxResaleCertificate should do all the hard work for you. We can make sure that you get all the advantages of a tax resale certificate without dealing with the hassle of government red tape. Let us handle the hard stuff so you can proceed to run your business with confidence. Make sure you check out our second blog in this series so you can learn even more valuable information about tax resale certificates.