Being An Entrepreneur Is Hard Work
There is no doubt that successful entrepreneurs will require hard work and dedication. However, the younger generations are no strangers to working several jobs and/or side hustles and still barely making enough money to pay the bills. This is not a comfortable life and will quickly wear anyone down. Comparatively, you will work hard in your own business, but it will feel much more worthwhile. The money will be much more satisfying, and you will be motivated and challenged in a new way.
Small Business Should Never Underestimate Taxes
The Internal Revenue Service has been more active in targeting small businesses for tax audits in the last several years. New businesses 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 right business entity can make your life as a new entrepreneur much easier in the coming future.
hat Are Some Of The Tax Surprises That A Startup Might Stumble Upon?
Net Profit
Do you properly understand how to handle your cash flow? Are you going to pay taxes based on
What is available in your checking account? Many business owners do not realize that their available cash is not the same as the company’s net profit.
Business Organization
Are you sure that you have chosen the proper business organization? The type of organization has a strong bearing on your tax structure, and you should make sure your organization utilizes the best tax structure for your business needs. Having a small business tax professional look over the Consumer Price Index is a good way to understand your business should be properly structured.
Independent Contractors
Are you confident that your independent contractors have not become employees during the tax year? Did you provide them with the right forms? Businesses need to understand how to document all who have done work for them properly, and the Internal Revenue Service or IRS regulations on such matters can be very perplexing.
Documenting Yourself
Have you, the owner, been taking money out of the business to pay personal or professional expenses?
Do you know what to call the money you have taken out? Are you drawing a salary?
Small business accounting can be quite complex and confusing. The wrong guess to any of these tough questions can land you a lot of trouble with the IRS. This is why having the proper small business consultant is crucial to protecting your business from unnecessary taxes and fines.
What Are Some Things A Startup Should Be Monitoring/Be On The Lookout For To Avoid Any Tax-Related Surprises?
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 that most of the stronger 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 help guide your business through every crucial moment, allowing for more financial security and stability. They will ensure you are not sidelined with incorrect information that will lead to bad business tax decisions.
Why You Should Pay For Professional Advice
Many new business owners think they can do taxes on their own and end up owing back taxes. I remember the first time a client of mine went to a tax professional. The person was able to analyze the code and get my client a refund of well over $6,000. This was well worth the $800 spent going to the professional in the first place.
Business Structure
One of the most important things you can do is be aware of the different types of legal structures and how they affect your overall tax and liability burden. You should be fully aware of the different business entities and what that means for your business.
What is a business entity?
One or more natural persons create a business entity to carry on a trade or business. Business owners often favor corporations and LLCs because they offer several layers of protection for their owners.
The following are types of business entities:
- Limited liability company: A registered business with limited liability for all members
- Professional limited liability company: An LLC structure for professionals, such as doctors and accountants
- C-corporation: An incorporated business composed of shareholders, directors, and officers
- S-corporation: An incorporated business that is taxed as a pass-through entity
- Professional corporation: A corporate structure for professionals, such as doctors and accountants
- B-corporation: A for-profit corporation that is certified for meeting social and environmental standards
- Nonprofit: Corporations: A formed primarily to benefit the public interest rather than earn a profit.
Getting A Tax Resale Certification Is One Of The Best Things You Can Do As An Entrepreneur
If you decide to start a business, a tax resale certificate can save you money on taxes.
In short, a tax retail 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 difficult, 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 having to deal 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.